D-Link is making changes to its structure and products, mainly launching vertical market solutions and focusing on its subscription platforms to differentiate itself from its competition. The move is expected to drive both revenue and profit growth, according to D-Link CEO CJ Chang.
Chang noted that network communications specifications are mainly formulated by four chipmakers: Qualcomm, Broadcom, MediaTek, and Realtek Semiconductors. He added that creating unique products and competing with Chinese makers on price is very difficult, which is why D-Link is focusing on vertical markets.
D-Link uses its Mydlink, Nuclias, and D-ECS platforms to focus on three markets: smart home, smart business, and smart industry.
To compete against TP-Link in the smart home field, D-Link provides customers with value-added services.
D-Link's enterprise cloud solution focuses on small and medium-sized businesses with less than 100 users. They currently have users in Japan, Poland, France, North Africa, and Australia.
D-Link mainly works with telecom operators, including VPN products. Their subscription fees are three times higher than the average, mainly focusing on the home office market, where it has a 70% market share in Japan.
D-Link is optimistic about opportunities in digital transportation, digital finance, and electric vehicles, where it will focus on subscriptions.
At present, subscriptions only account for 3% of D-Link's revenue, but Chang expects its share to continue growing in the future.
D-Link's third-quarter 2022 revenue amounted to NT$4.49 billion (US$145.67 million) for a sequential increase of 7.9% and an on-year increase of 13.3%. Accumulated revenue from the first three quarters of 2022 reached NT$12.66 billion, a 12.8% increase on year.
Gross margin in the third quarter bottomed out at 20.6%, attributed to the ongoing Russia-Ukraine war and inventory price loss. Chang expects it will be over 30% in the fourth quarter, benefiting from successful inventory control and results of product optimization, which will drive the annual gross margin to 25%.
D-Link's annual revenue previously hit NT$30 billion but has continued to fall in recent years. Revenue has now declined by nearly half, according to Chang. The company expects annual revenue will return to 2019 levels and reach NT$17 billion in 2022 and will continue to grow in 2023.
Chang believes it will take another 10 years for D-Link to reach annual revenue of NT$30 billion again.
D-Link witnessed revenue growth in the Pan-Asia market and a decline in the European and North American markets.
Chang pointed out that the US is a major market, but price cutting is intense in the US market and competition is fierce.
D-Link has been losing money in the US market for the past 20 years but will turn a profit in 2022, according to Chang.
Article translated by Eifeh Strom
