Avnet 2000 Annual Report Download - page 13

In October 1999, with segments of Avnet Electronics
Marketing (OEM Systems Product Business Group and
Personal Computer Components) and Avnet Computer Marketing (Hall-Mark
Computer Components), Avnet Applied Computing (AAC) started up as a North
American business. Under the leadership of president Ed Kamins, Avnet’s third and
newest operating group has completed its first nine months in existence with sales of
$670.5 million – or currently an annualized run rate in excess of $1 billion in FY’01. Most
importantly, AAC has been profitable from the outset, with operating profits increasing
sequentially each quarter.
Just as Avnet was first to market with a dedicated operating group strategy to target
the embedded computing market, so too do customers and suppliers want to be first
to market with their products and services. In fact, time to market has become the
overriding theme of AAC. With technologies rapidly changing, the need to develop and
produce products more quickly is leading to more customers using commercially available
computing technologies as the building blocks of their products. More and more, their
intellectual property is tied up in their unique product interfaces and their software. AAC
distributes off-the-shelf products such as microprocessors at the chip, board and box
level, mass storage, flat panel displays and embedded software operating systems from
premier suppliers. Applications for these products include equipment such as blood ana-
lyzers, telecommunication systems and film editing equipment.
AAC has also merged segments of the Marshall acquisition in North America and part of
the Eurotronics B.V. (SEI) and SEI Macro Group acquisitions in Europe. In January, the
Personal Computer Components Division/ Europe joined AAC from Avnet Electronics
Marketing / EMEA. These additions, coupled with organic growth, helped AAC finish the
year having doubled its start-up revenue. As FY’01 begins, AAC is adding the storage
and original equipment manufacturer (OEM) segments of the recent Savoir acquisition
to its growth plan.
AAC was recognized by the Motorola Computer Group as its Distributor of the Year, and was
selected by Microsoft as the first industrial distributor to carry its embedded operating sys-
tem family of products. AAC also enjoys leading positions with Intel, IBM Technology Group
and AMD. In addition, it garnered the number one position in the North American distribution
of the flat panel display products of Sharp and NEC, the industry leaders. AAC boasts an
all-star lineup of suppliers and a focused strategy that attracts significant new customers,
validating Avnet’s strategy to be the first to dedicate an entire operating group to the
subsystem- and system-level needs of OEMs.
Starting out with two business units, AAC now has five: Applied Computing
Solutions (ACS)/ North America, which is focused on computing technology,
sub-system and system-level products and related services; Applied Computing
Components (ACC)/ North America and ACC/ Europe, which serve manufacturers
of personal computers and systems integrators with microprocessors, dynamic
technologies for data storage products, networking products and system building
blocks; AAC Asia; and the newest division, Applied Computing Enabling
Technologies (ACET), which serves systems integrators.
BRICKS AND CLICKS
The new Applied Computing Labs represent a significant value proposition for
AAC customers. To be the best technical sales and engineering force in the
industry, and first to market, AAC needs two things: the bricks and the clicks.
The first lab, recently built in Tempe, Arizona, offers a product showcase of the
latest technology from premier suppliers. It is the place – the bricks – where
customer engineers can meet with the AAC engineering team to design their
product specifications and build their prototypes. This lab will be the feeder
source for the Product Integration Center, which will build these products for
customers to the specifications designed in the lab.
Also launched, early in FY’01, was the Avnet
FasTrac Web portal – the clicks –
which will quickly become the primary information source for customers who need
engineering information from AAC or its suppliers.
GOING FORWARD
The primary thrust for AAC is to establish a fully integrated solutions business globally.
Having established a strong North American business, AAC is now focusing on Asia and
Europe, with plans to grow organically and through acquisitions. AAC serves an exciting
growth industry where OEM customers are achieving higher levels of integration and creating
systems with standard, off-the-shelf products – decreasing the time engineers spend
designing products and therefore increasing speed to market. Because AAC is currently the
only distributor dedicated to embedded systems, the distributor total available market
(DTAM) share is expected to increase. The applied computing market is expected to
continue to accelerate in its growth.
AAC SALES
BY PRODUCT
Applied Computing Components 69%
Applied Computing Solutions 31%
A prototype board interfacing to a
flat-panel display undergoes final
testing at the new Avnet Applied
Computing Lab, Tempe, Arizona.
Installing memory modules into a
motherboard on a build-to-order
personal computer.
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AVNET APPLIED COMPUTING
Avnet Applied Computing’s
mission is to help its customers
be first to market by creating
systems with standard, off-the-
shelf products.