Launch driven by strong customer demandUltrasound vendor Advanced Technology Laboratories has become the second single-modality company to service the equipment of its competitors with the May 21 launch of its Multivendor Service Support Program.
Launch driven by strong customer demand
Ultrasound vendor Advanced Technology Laboratories has become the second single-modality company to service the equipment of its competitors with the May 21 launch of its Multivendor Service Support Program. The nuclear medicine company ADAC Laboratories was the first, when it began in 1995 to offer multivendor service for gamma cameras.
ATL's program offers U.S. owners of ultrasound equipment technical support, parts, and on-site service. While a single-modality service offering seems to run counter to the interest radiology administrators show in bundling service contracts, ATL has launched the program in response to customer demand.
"A lot of our customers came to us and asked if we would service their other products," said Lourens Steger, vice president of customer support.
The ATL service force appears qualified to handle multiple makes and models of equipment. In the company's 20-year history, it has serviced more than 30 products, both those developed internally and those added as part of supply agreements, such as Ultramark 6 and 7 from Fujitsu. Products gained via acquisitions, as in the case of Interspec, were also covered. In addition, the Bothell, WA-based company has received ISO 9001 certification for its service program, which includes 420 engineers worldwide. (ATL does not disclose the number of engineers in the U.S.)
But even with such a large worldwide service force, ATL makes only 21% of its total revenue from service provided to its installed base of 20,000 systems. The relatively low percentage of revenues from service is typical of the ultrasound industry. Estimates show that service accounts for 30% or less of all ultrasound revenues in the U.S., compared with 50% or more in other modalities.
The numbers are even less attractive in other parts of the world, where service accounts for 20% of total revenues in Europe and Japan, and virtually zero in emerging markets. That is one reason ATL is concentrating, at least initially, on the U.S. service market, which is worth more than $250 million for ultrasound, Steger said.
ATL could pick up some of this revenue by providing coverage for companies that prefer not to offer service. Since the program was announced, several smaller ultrasound companies have inquired about a potential partnership with ATL, Steger said.
Companies with larger service organizations have been less receptive, however. In some cases, these companies have informed ATL that it will have a tough time getting parts for their machines.
ATL does not expect this to be a problem, however. During sales of its new ultrasound systems, it accepts trade-ins of competitors' systems, which can easily be cannibalized for parts. In the end, efforts to complicate ATL's efforts in the multivendor service arena will backfire, Steger said.
"The reality is that their customers are not going to be happy that these companies want to limit the choice of service provider," Steger said. "Customers in the long term are not going to put up with that."