The term closest competitors could have been coined for Xplore Technologies and Motion Computing. Whilst they both competed in the niche market place of rugged computing, physically they were even closer - both being based on the same stretch of road in Texas. So it was almost inevitable that the two would eventually merge, which they did in April 2015 - making them the world’s 2nd largest manufacturer of rugged tablets overnight.
But when something is inevitable it doesn’t always mean it’s easy. Kris Oldland spoke exclusively to Mark Holleran COO, Xplore Technologies to find out more about the recent past, the present and the near future of the Texan Rugged Specialists.
It is testament to Holleran’s hands on approach to managing Xplore Technologies and his resulting busy diary that it has taken the best part of three months of diary juggling on both sides of the Atlantic before we are finally able to schedule a call that actually worked for this interview.
With this in mind, ahead of the call I was expecting it to perhaps be a somewhat hurried affair, with Holleran spouting off some pre-scripted soundbites that most CEOs seem to usually have to hand - particularly when being questioned about M&A activity. Generic quotes about mutual respect, optimistic futures and grandiose visions of world domination that to put it politely aren’t never quite in tune with reality.
Fortunately, it turns out my instincts were wrong.
Whether it was a result of the legendary friendly nature of Texans so often commented on, Holleran’s genuine passion for his company and the industry at large (he has been with Xplore for over 13 years and in the tech space for over 30) or as is more likely a combination of both factors, Holleran proved to be both engaging and insightful during the hour and a bit that we spoke.
Indeed, he was not only prepared to take the time to answer the questions put to him with thoughtful and reasoned responses, but also with a level of straight honesty that is all too often missing in trade journal interviews today.
Often, the real insight within an interviewee’s responses can get buried under wave after wave of hyperbole and over exaggeration that often needs to be translated back from marketingspeak.
At the same time it seems that many trade journalists are frightened to ask anything too probing these days in case it upsets any commercial relationships.
It does of course help when the story is as compelling as Xplore’s acquisition of Motion which suddenly catapulted them to being the world’s second largest manufacturer of rugged tablets, seemingly almost overnight.
Fortunately in Holleran, it seemed I had discovered a kindred spirit in someone that believes in the virtues of just saying it as it is and letting the story speak for itself.
That said, it does of course help when the story is as compelling as Xplore’s acquisition of Motion which suddenly catapulted them to being the world’s second largest manufacturer of rugged tablets, seemingly almost overnight.
As mentioned above the prospect of Xplore and Motion coming together at some point had a certain sense of inevitability about it.
However, most analysts would have predicted it would have been Motion who acquired Xplore rather than the other way around and the speed of Xplore’s acquisition of their rivals from up the road certainly took a few in the industry by surprise.
“I think Motion was foreclosed on Friday, on the Monday we bought the assets and the next Friday we had a BBQ where there was 53 people all together” Holleran explains when we discuss the speed at which everything was completed.
Indeed, the shared culture of the two companies that were literally based on the same road in Texas, was already firmly in place well before the acquisition happened.
Holleran recounts how at that inaugural group BBQ one very astute individual asked all those who had previously worked for both companies to stand up - about 40 people did so.
In fact, there had already been previous conversations about bringing the two companies together as Holleran explained.
“It was originally the Motion founders that approached Xplore, but my predecessor wasn’t receptive to that, we did talk and in the end we did try and help each other.”
“For me, did I think we would we eventually work out something – yes I’d like to think so. Then we took the opportunity when it came around and fortunately for us we were in the better financial health - so it was us who acquired them,” he adds.
We saw a unique opportunity to acquire an asset that was very complimentary, their products are 100% complimentary to ours.
As Holleran explains “If you look at Xplore’s history we were in the Ultra Rugged tablets space, we made the most rugged PC in the world. Then about five years ago we decided to enter to the fully rugged space but we didn’t really compete with Motion, who would have been in what we viewed as the semi-rugged space. So we saw a unique opportunity to acquire an asset that was very complimentary, their products are 100% complimentary to ours. Their channel was also very complimentary with around 80-90%, distribution which was also something they did which we didn’t do, They were working on a dual tier model and we were working on a single tier model,” he adds.
Basically, what Xplore did well, Motion was weaker at and vice versa and this also translated into vertical and geographical exposure.
“Some major companies and customers are now embracing our products more because Motion was number three in the market and we’ve got over 20 years experience,” Holleran asserts before making the bold, yet perfectly valid statement that with Motion and their product range brought into the Xplore fold they now “have the god given right now to expect to be on every major rugged tablet RFP.”
At this point we do need to address the elephant in the room. Namely the fact that the reason Xplore was able to acquire their bigger competitor was largely due to the fact that Motion had suffered from issues in the supply chain, that ultimately led to financial challenges.
Was this an issue that was now fully resolved?
“There are always issues in the supply chain but if you understand that and you work closely in the supply chain they can be overcome,” insists Holleran.
“Myself, I travel to Taipei once a quarter. And don’t forget we’ve been doing this longer than anyone else. We were there 14/15 years ago so we understand their culture and their history, we have long standing relationships over there and we have an excellent reputation there,” he adds.
Yet, supply chain challenges are not the only potential threats to the ongoing success of Xplore Technologies. Is the rugged tablet market itself in a healthy position?
I would say that basic physics says that you cannot build a notebook or a 2-in1 device as rugged as a tablet
I was keen to get Holleran’s opinion on products such as the Panasonic CF-20 - a fully rugged detachable that offers the dual benefit of being both a laptop and tablet at the same time. Will we ever see a similar device from the Xplore team?
“We never say never but our speciality and history is in tablets and we consider ourselves the world experts on rugged tablets – we’ve been doing it for twenty years which is longer than Panasonic has,“ he replies when I put the question to him.
“We’re investigating that area – but I would say that basic physics says that you cannot build a notebook or a 2-in1 device as rugged as a tablet”
“It all depends on your needs – if you're really keyboard centric and data intensive then a 2-in-1 is for you, but as soon as you put a keyboard onto a device it is not a truly mobile device to use. You can carry it, but you can’t just pull it up within one hand and then use it, that’s only the function of a tablet. So if you need mobility, if you need to have one hand free to keep other things working – then you really do need a tablet,” he added.
Of course, another threat to rugged manufacturers is that of the consumer OEMs.
In the past the argument from rugged manufacturers was a fairly straight forward one. If you worked in an environment where your tablet could get a bit wet or accidentally knocked about then you really needed to go with something rugged.
However, with consumer manufacturers releasing products that are themselves becoming more rugged such as recent Samsung products being IP68 certified - are the lines between business-rugged, semi-rugged and rugged all blurring somewhat? If so why should we invest in devices from specialist rugged manufacturers such as Xplore?
Our market is not inside an office or going out occasionally. Our market is in nasty plants, outside, with rain, sleet, snow, hot, cold, vibrations from vehicles
“If you are looking at an IP rating, which means it is protected against dust and water that’s one thing, but you can’t use these devices in extreme temperatures, you can’t see them in the bright sun, you still can’t drop these devices,” he adds.
“There is a need for different types of devices but those devices are not enterprise class PCs. They’re basically for reading your emails, watching a video or game – if you want them for doing a dispatch, accessing your ERP or picking system for example then no – they’re not going to run.”
“Our market is not inside an office or going out occasionally. Our market is in nasty plants, outside, with rain, sleet, snow, hot, cold, vibrations from vehicles. So if anything we see it [competition from consumer brands] as good for us as it lends more credibility to the need for fully rugged devices.”
“It gives some people a better understanding of the fact that in different environments you’ll need different types of ruggedization and there are considerable degrees of ruggedization. There are different needs for different people of course.”
“We’ve seen people trying some of these consumer products, putting rugged cases around them and trying them. We’ve seen them do that and now they’re not.”
“Basically it’s simple – when the product is a tool for your job, in other words if your computer is not working then you cannot do your job – then you really need a rugged device. If you’ve got your dispatch system, your inventory systems, your schedule, your maps, your components then if that computer is not working you can’t do your job – so people in that scenario want a rugged device that’s going to last.”
“Our marketing strategy is quality; our products exceed our customer’s specs.”
“If you want a product that can stay in the field for three or four years, then you need a rugged device, you can’t put an enterprise device in – it just won’t last,” he concludes.
What about the sometimes mooted concept of just having a rack of pre-loaded cheap tablets, so when one device fails an engineer can just pick up a new one from HQ?
“The problem with this idea problem is how do you get to all your data?” Holleran retorts.
“If your computer breaks, that data has then got to be put on a new computer and then you have to make sure that the new computer has all the security protocols etc, so your talking about days - maybe even a week if there is a backlog. A week where nothing happens and a guy can’t work? Do they just get an extra vacation whilst you lose money?” He asks.
From our conversation it seemed clear to me that Holleran not only has a strong depth of knowledge about his own market and the wider sectors he operates in, but also has similar depth of knowledge in understanding his customers needs and their workflows. I was keen to discuss this further so asked him how prevalent was such knowledge of their customer’s workflows across the company and was this ingrained into the success of Xplore to date.
“That is very important to us – Xplore is very much a customer centric company,” he begins.
“We will even put features into a product for the customer if required. For example, in our Rugged Android D10 we have HDMI-in port which allows it to work as a Telco testing device. So yes, that is one of our core competencies, it’s critical to the company and is a foundation which the business has been built upon.“
Indeed, it seems that the future for Xplore Technologies is well plotted and in Holleran they have a leader who has a clear understanding of where their strengths lie and how they can leverage those to best serve the markets they operate within.
“We still have new products under development the XSLATE will be the brand. We will continue to be a premium supplier with innovative technology; we have some new innovations under development,” he asserts.
“We intend to be the world’s expert authority on rugged tablets and peripherals attached to that. I tell people if you really want to buy a rugged notebook go buy Panasonic.”
“If you want to buy a rugged tablet come to Xplore – that’s what we do and we are the world's best at it.”