Avnet Embeds Growth Plans In OEM Unit

Electronic News, Jan 25, 1999 by Heidi Elliott

Phoenix, Ariz.-OEM Systems is another market Avnet is tapping for future growth. The second-largest distributor of electronic components plans to make its OEM Systems Product Business Group second only to its semiconductor business. Right now, the OEM Systems Group has revenue of $150 million, said Troy Blanchette, vice president of the group, which targets the embedded systems and peripherals market.

Within three years, the group is expected to triple its size. Blanchette and other Avnet executives believe the OEM Systems group will grow significantly as part of the outsourcing trend. OEMs can tap into Avnet's resources for technical support with embedded systems. The group competes with other distributors who perform similar services, particularly Marshall Industries. Right now, Avnet's semiconductor product segment is the company's biggest revenue earner at more than 50 percent of revenues. It is followed by interconnect products then passive and electromechanical product sales. Inside of Avnet, there is another group that sells computers to a different customer segment. While that Computer Marketing Group sells primarily to the value-added reseller (VAR) community, the OEM Systems Group sells mass storage and system-level products to the original equipment manufacturer marketplace. Product Business Groups at Avnet are responsible for inventory management, demand creation and supplier relationships. "We help customers with design decisions and serve as a resource point for the sales teams," Blanchette said. The OEM Systems group was formally founded in December 1997. It was separated as a unit to focus on the customer base it served - a precursor to the company's reorganization along customer lines last year. Prior to that, the group was part of the Hamilton Hallmark division of Avnet. The group includes a business development unit, marketing unit, two product units (mass storage and systems-level products,) and the OEM Systems Lab. The lab, located in Phoenix, is staffed by six engineers who perform engineering and integration work on embedded designs, including configuration consulting, product migration, prototype systems, a demo pool and reference and design kits. "It's a real competitive advantage," Blanchette said. "We act as the R&D for our customer." He noted just over half the prototypes have ultimately ended up in production. The lab serves North American customers and for now, there are no plans to take it to a global level service. Another service to its customers is the group's website (www.em.avnet.com/oemsystems/) The site, launched in October, gives updates on the latest services, information on market research, product data, white papers, technical articles and future events. It also provides linkage to suppliers like Intel, Seagate and ZF Microsystems.