QuickLogic Drops Bell Micro

Electronic News, June 26, 2000 by Marie Eve Demers

Citing reasons of strategy, QuickLogic Corp. has realigned its distribution channel, disengaging from distribution partner Bell Microproducts Inc. after a nine-year relationship. QuickLogic's lines will be distributed by its three remaining distributorsaAvnet Inc., Future Electronics and Impact Technologies LLC.

"The change was really a strategic, forward-looking move on our part, rather than a reaction to anything Bell did or didn't do," said Dana Canatsy, director of sales, and corporate distribution for Sunnyvale, Calif.-based QuickLogic. "Our real niche, with which we try to differentiate our product line, is the ESP products, embedded standard products. We need to have both our reps and our distributors to create demand for these products." For that reason, the company needs a sales force that is very technical and trained properly, Canatsy said. "We went with the distributors we felt could create the demand based on the products they were putting out. Avnet, Future and Impact, we felt, were better suited to drive our sales using that model."

Many component suppliers have reduced their distribution rosters, including Texas Instruments and Fairchild Semiconductor. And a recent study by Cahners Research shows that more than half the companies surveyed have reduced the number of distributors that they do business with.

Bell Microproducts insists it is investing heavily in demand creation and explained QuickLogic's decision in different terms. The programmable logic company was over-distributed, according to Brian Clark, senior vice president of OEM sales at Bell Microproducts, a situation that he said led it to QuickLogic's decision to reduce the number of distribution partners. "Bell Microproducts truly believes in and deploys demand-creation resources to support our manufacturers' technologies and will continue to invest in their area." In the nine-year relationship between QuickLogic and Bell, there have been many philosophical differences between the two companies, Clark said. "Most recently, the biggest difference was QuickLogic's demand for an inordinate amount of resources dedicated to the QuickLogic product line. At less than $5 million in sales in calendar year 1999, QuickLogic represented approximately one percent of Bell Microproducts' semiconductor sales and less than 0.5 percent of our total sales," the executive explained.

As Bell Microproducts and QuickLogic part company, their nine-year alliance was the oldest among the four distributors. "Bell Microproducts was QuickLogic's second largest distributor with 29 percent market share as well as being the second largest distributor for design registrations, having the largest number of designs in QuickLogic's newer technology products," Clark said.

QuickLogic's Canatsy reacted to Bell's comments by maintaining that the distributor had been promising increased demand-creation resources for many years with no satisfactory results. "We need to partner with distributors that are semiconductor-oriented, rather than system-oriented, and that have demand-creation resources already in place," Canatsy said. He added that his company's demands were not excessive considering that the company's line is very design-intensive and needs resources to be maintained. The decision to deal with three distributors instead of four was also motivated by QuickLogic's desire to gain share in the eyes of each of the remaining partners, Canatsy said.