Why Toshiba Should Be Suing Castel

COMMENT: The massive claim lodged by Melbourne-based distributor Castel Electronics against Toshiba has got to be a giant wind up as several former Castel staff, including the Company’s former Marketing Director Randall Crocker, claim that they have no knowledge of what would have to be catastrophic failure of Toshiba consumer electronic gear to justify a $30 million dollar damages plus payout.

Even I knew 12 months before Castel was dumped by Toshiba that the Melbourne-based distributor was set to be given the flick by the Japanese Company, who has admitted that while there were some problems with Toshiba products being sold by Castel, there were not “that many” to warrant such a massive claim.

Several former Castel specialist dealers who sold the Toshiba gear have said that they are surprised by the claim. “Yes we had some problems with the HD recorder but not enough that it was of great concern” said Len Wallis of Len Wallis Audio. Steve Neil at Eastwood Hi Fi in Sydney said he had no problems with the Toshiba products that he sold. However several forums in Australia have reported consumer problems with Toshiba’s HD recorder and set top box.

What is interesting is the timing of this claim. Late in 2005 ChannelNews reported that Castel Electronics was set to be dumped by Toshiba. At the time the local subsidiary, Toshiba Australia, had lodged a submission with Toshiba Singapore who was responsible for Toshiba operations in Australia, to take over sales of the Company’s consumer electronics products.

At the time local Toshiba management claimed that they believed that they could do a better job than Castel. This has since been borne out with the local subsidiary almost doubling sales of Toshiba TVs, DVD players and projectors in Australia.
Back in 2005 we also revealed that Castel management, under the leadership of CEO Michael Kwong, had decided to openly criticise mass market CE resellers by claiming that they delivered poor service and had little product knowledge.

In a document obtained by ChannelNews at the time, Castel openly solicited dollars from specialist resellers to take on mass market resellers like Harvey Norman, JB Hi Fi and others. These were the very customers who had the potential to deliver millions of dollars worth of revenue to Castel with the Toshiba brand.

What is interesting is that former Castel staff like Paul Astbury, the Toshiba product manager, and Crocker, have no knowledge of this major calamity that is alleged to have happened during their employment at the Company.

A search of the Digital TV Forum reveals that Castel is not without their own critics. Back in 2006 and 2005 several consumers wrote about their experience of dealing with the Melbourne-based distributor. One consumer wrote after they were dumped by Toshiba. “Funny this coming after a couple of weeks ago, emailing Toshiba HQ enquiring as to what is the story with Castel and their terrible Toshiba product knowledge.”

Another forum visitor wrote: “Best news I heard, Castel definitely had no product knowledge on HD and gave me wrong information in the past regarding HD. And another visitor said, “Brilliant news, Toshiba CE products are severely under marketed and supported in Aus, Castel were idiots.”

One has to raise the question as to why Castel Electronics kept on selling the Toshiba product range between 2005 and 2006 if the product was so faulty.

And why were they soliciting resellers to fund a Toshiba based advertising campaign which was to be 50% funded by Castel for product that they say in their claim had extensive problems, and was “inherently defective”. Castel has said that 54 different faults were identified and the product was eventually withdrawn from sale.

While there were problems with the Toshiba set top box and the HD recorder I doubt whether they are worth millions in damages. Maybe Toshiba can counter sue Castel for failing to achieve better sales for their products. And maybe, Toshiba should be compensated for the stupid Castel marketing campaign that saw them take on mass market retailers.