Kingston - secret of success. Interview with John Tu

What to you know about Kingston memory? Most of our readers who are well aware of computer equipment must remember that produce of this American company is eminent for superior quality and increased reliability. Until recent times, the interests of Kingston have been focused mainly at provisioning OEM manufacturers, and only a few years ago the company started making produce aimed at the mass user - Value RAM modules. The next stage on the way of progress of Kingston is settling the growing market of digital devices - manufacture of flash cards for photo cameras and portable USB storage devices. Despite the sheer competition, the company remains of the leading players and its produce enjoys a well-deserved popularity not only on the Russian but the world market.

What is the secret of Kingston's success? What awaits the company in the nearest future? What are its plans? This and other questions we posed to the president and of the owners of Kingston, Mr. John Tu.

Biography:

John Tu was born in Shanghai in 1942. In 1970, he graduated from the Technische Hochschule university (Darmstadt, Germany) as electrical engineer. In 1972, he emigrated from Germany to the USA. Mr. Tu became the president and of the founders of Camintonn Corporation which within 1982 to 1986 produced semiconductor components for DEC corporation. Upon acquisition of AST Research (Irwin, California), he settled at AST and became vice-president and head manager of the digital technologies division. Since 1987, he has been a co-owner of Kingston Technology Corporation.

FERRA. First of all, we'd like to note that your trademark is very well known to us, and we highly value your produce. We'd like to hear your personal view of Kingston and what is your vision of the company.

J.T. Thank you for the kind words. It is very pleasant to me that our produce is finding positive response in the computer press. As regards my view, Kingston for me is a technology company. Our major business is memory - from desktops to super-portable devices. It is the way it's always been and will be.

FERRA. What are the plans for memory?

J.T. We are aware of the current situation on the market. In the nearest time, we plan to focus on producing memory for mobile phones. In my view, it is of the key directions, since the industry is progressing at an impetuous pace.

FERRA. Does it mean that Kingston will not pay a special attention to the area of flash cards and USB storage devices?

J.T. On no account! We have done much for developing this product category and regard the direction as no less topical for both today and the nearest future. Memory for mobile phones is a long-term and quite a promising project, but we'll be developing it , without detriment to other directions.

FERRA. What are your estimates of Russia's market in the worldwide scale? In terms of Kingston produce sales, what place are we taking?

J.T. Judging by the last year, Russia in our rating takes approximately the tenth place after several countries of the South-East Asia and Western Europe. In my view, your country is able providing much higher volumes of our produce sales.

FERRA. Anyway, we'd like to hear some specific figures.

J.T. In 2004, the proceeds from sale in Russia amounted about 45 mln. dollars. In my view, it is a sufficient ground for further integration onto the market of your country.

FERRA. Are you pleased by these results?

J.T. Of course, we are very pleased by that 5 years ago we started our official activities on the Russian market, and in the nearest future we'll be developing it for ourselves. By development I mean the feasibility of establishing an office with an organized technical support service and our own sales managers.

FERRA. Does Kingston regard our country only as a market for sales of finished produce, or are there any plans as to the establishment of production, research laboratories etc.?

J.T. Unfortunately, we see that in Russia there are still many obstacles for business development. The market relations and internal policies have not yet reached the level when we would be ready for more or less serious and long-term investments. Nevertheless, I believe Russia has good potentials - no less than Europe, China or India. I like your president Putin. :-)

FERRA. How are you planning to run competitive activity on the Russian market? It is known that the giant like Samsung has long won leading positions owing to the powerful advertising and PR-support.

J.T. In fact, the answer is closely related to the previous question. It is in our plans to set up technical support services, consumer support, establishing a chain of local offices, more active involvement of regional distributors... As far as I know, Samsung has only one office in Russia. We are also planning the so-called "field" activities.

FERRA. But Samsung also has a well-established chain of distributors and service centers. What could you oppose to that?

J.T. I'd like to answer this question in more detail. For the 18 years of Kingston existence, we have been smoothly moving forward through adding new directions and improvement of existing ones in terms of technology. However, our advantage is in our flexible approach. We are not only a technologically competent company, we are also a fairly flexible management structure. Industry giants are not able responding so promptly to the ever changing situation on the market. But we can do that!

FERRA. Could you please be more specific? What about Samsung?

J.T. Samsung as the largest semiconductor producer is a rather strong structure and a dangerous competitor. But there is one nuance. Samsung's major direction in the memory production is supplying OEM companies like IBM, HP, and Dell with memory. We are also working with such manufacturers, but we are not focused on them. As is known, over 50% of the IT market belongs to much smaller companies, so our business is more aimed at this category. Our flexibility allows us to respond more promptly to the requests of middle and small companies, thus taking a lead over competitors including at the technology matters.

FERRA. Are these policies bringing anticipated results?

J.T. Absolutely! Our flexibility, striving for maximum customer satisfaction and search for new ways for creating optimum technical solutions allowed us to become a strategic partner of Intel. As is known, Intel's policies on the microprocessor market are very similar to ours on the memory market, that is, we are not restricting ourselves to large consumers only. At the same time, Intel produces necessary results much faster and more efficiently.

FERRA. As long as we are talking about Intel... Modern chipsets are in need of DDR2-667 memory to increase performance. Does Intel render support in certifying this standard, and how soon will it expel DDR1 with the previous DDR2?

J.T. We have a specialized ADL division involved in the matters of memory standards certification. Intel gives our specialists all the required help, which substantially facilitates their tasks. Regarding the terms - in the third quarter, we are planning to bring DDR2-667 to the full production capacity since already in the second quarter most OEM companies are planning to produce desktops with support for this memory standard.

FERRA. Are yourselves ready for that?

J.T. We were ready for that still in the past year. I intentionally mentioned flexibility as our major principle. All the technology developments started well in advance, then all was left is merely prepare production capacities. Now we are waiting for orders for the produce.

FERRA. By the way, regarding the production. Are you planning to equip all the Kingston produce with proprietary chips?

J.T. We'll never do that. Memory module production volumes are too large, and to date we are not ready to provide such a huge number of own chips. However, that is not the only reason. At the company we have a proverb: "a successful business needs three satisfied groups: employees, suppliers, and buyers." In this case, we may leave suppliers displeased, which is contrary to the major principles of Kingston. These are not mere words, it is a whole philosophy which helps the company operate successfully for 18 years already.

FERRA. Nevertheless, companies who have a complete production cycle are not only existing - they are also prosperous.

J.T. It is my deep conviction that successful business sometimes requires not only activity but also inactivity in certain areas. You can's grasp all at a time. It's better to do only where you are an absolute expert.

FERRA. I'd like to ask you one more provocative question regarding the principles. Kingston is steadily growing. Doesn't the president fear that the company may turn huge and clumsy as most industry giants?

J.T. That is a very important question. The answer will be long enough, but that is necessary for the precise understanding of the situation. If we look at Kingston's history since 1987, every year the company turned larger and larger. We have successfully outlived all the crises which regularly come up on the memory market, and in 2004 our income amounted to about 2.5 bln dollars. Can we lose flexibility? There is such a danger of course, but it is negligible. Kingston's key feature is in that it uses no pyramidal management structure typical of large companies. Our company is more likely planar, so to speak. All the problems, even of local scale, are discussed and addressed together. We have no numerous managers subordinated to each other, and any information is made available to the management within a few minutes. This approach also applies to decision-making, and we don't carry the procedure of approval any plans to an absurdity as it is the case in large enterprises.

FERRA. That is, do you adhere democratic principles?

J.T. I'd better define it as the principle of rational democracy. The management of Kingston is accessible and open for communication with employees. That is one of the causes of our employees' satisfaction which, as I already noted, is the unshakable principle of our company. Employees in turn are aware of the level of problems which make sense to be discussed with the management and do not build up complexity of communication within the company.

FERRA. On the whole, it seems all is going well with Kingston, and we'd like to express and gratitude to Mr. Tu for the time he devoted to us and our readers.

J.T. In response, I'd like to say I am sincerely happy about the interest shown by Russian press to our company. In May, we plan to visit your country, and I hope to get a closer idea of Russia and Russian partners.