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I daresay Charles Avnet, if he were still around today, would recognize neither the components distribution business he founded in 1921, nor Manhattan, the city where he opened the first store for what has since turned into a Fortune 500 company.
In fiscal 2012 ended June 30, {complink 577|Avnet Inc.}, the company that today bears Mr. Avnet's name, had $25.7 billion in revenue, compared with the $85,000 it posted in its first year of business selling components to the then nascent radio world. The founder would have found the latest numbers stunning, but I bet he would have been proud of his company too.
Avnet's history and the evolution of the electronics component distribution market is worth reviewing, if only to understand how distributors have responded to changes and how the top players used a well honed and aggressive acquisition strategy to consolidate the market and become dominant enterprises. With more than 300 sales offices worldwide and 17,000 employees selling products and services from hundreds of partners to over 100,000 customers globally, Avnet clearly has moved far from its humble origin in New York City. Click here for a timeline of Avnet's growth over its 91-year existence.
Distribution is not a market where even the biggest and most dominant players can afford to rest on their laurels, however. While many still refer to companies like Avnet and North American arch-rival {complink 453|Arrow Electronics Inc.} as distributors — deceptively giving them the image of mere middlemen — these companies are anything but transition points for products moving from manufacturers to end equipment producers and assemblers. Over the decades, distribution has changed dramatically, and the range of services offered has expanded to almost all segments of the electronics manufacturing and information technology markets.
That's why this month on Velocity we will be offering a wide range of articles on the distribution market with the goal of helping the industry better understand this critical segment. EBN writers and industry experts will explore topics related to the growth of the industry, its future in key market regions — especially in developing regions like China and Brazil — and focus on issues and challenges facing distributors.
Of key interest to me personally is how the industry is responding to changes at many of its customers and suppliers; addressing the problem of counterfeiting and how to build effective supply chain systems; and forecasting inaccuracies and the demand-supply imbalances that have in the past crippled the industry. I would like to also explore the evolution of the distribution business in Japan and whether the same round of M&A activities that dramatically shrank the ranks of distributors in North America will occur in China. I believe this is inevitable and that the events will also be led mostly by the industry giants.
Of course, M&A activities can have downsides. It decimated the ranks of semiconductor vendors, for example, but as new fabless chip makers emerged, their presence strengthened wafer foundries, while the emergence of independent design firms has created opportunities for new businesses. We'll also be exploring strategies for the relatively slower-growing European and North American markets where the biggest distributors have solidified their position via both Greenfield expansions and acquisitions.
Today, the leading distributors are still the major sellers of electronic components, but they also offer numerous value-added services, including subassembly, inventory management, vendor management, logistics, and other supply chain and design chain functions. Avnet generally doesn't describe itself anymore simply as a distributor. Here's how the company sees itself, according to a statement on its investor relations site:
- In addition to its core distribution services, Avnet markets, adds value and creates demand for the products of the world's leading electronic component suppliers, enterprise computing manufacturers and embedded subsystem providers. Avnet brings a breadth and depth of service capabilities, such as supply-chain and design-chain services, logistics solutions, product assembly, device programming, and computer system configuration and integration.
That description of Avnet may change again in future. In another decade or two, the distribution market itself probably would have evolved again as today's executives hand over the baton to another set of leaders. Already distributors are offering services that go deeper into the electronics supply chain and helping customers come up with product concepts — well before anyone even imagines what components would be needed.
Charles Avnet, in a YouTube narration dramatized by Avnet, said the late 1920s were the “golden age of radio [and] golden for the Avnet family.” I wonder how he might describe distribution and Avnet today.
Saw the you tube video on “History of Avnet”. I guess they started very well with the basic needs of all electronics products, the connectors. You need connectors almost anywhere and everywhere. And ofcourse the passive components like capacitors and resistors. Its also important to note that they got the correct leadership who had the right vision. They made the right acquisitions, in the video it says acquisitions every 3 months. When you know where you are going and you are open to travel globally, you handle cost and oeprations well and you recognize your employees well, you are bound to progress and succeed. Handling the cost and operations is the key when you grow, keeping employee morale high and that Avnet has done wonderfully. They indeeed has come up from just being the distributors to a value added business.
Nicole, for patient registration there are certain procedures. You can have a provisional registration of one year validity before completing the end stage (invention or technology). After that you can proceed for the final patenting. This provisional registration will help you to retain the idea or technology and make sure you will get a better mileage throughout the patenting process. Moreover, once you had the provisional registration, the relevant publications/lists may discourage others for filing the same once again.
I like this, first to file vs first to invent. One question how does one determine that who has invented first. I am sure its very easy to know who filed first. Is it through documented procedures or notes. Then how will one verify that dates in the document are not forged. Although I fully agree and support that the one who invents first must have the patent in his/hers name but its definitely not going to be easy to determine looking at the the amount of warriors in patent war.
Sounds like the latest development in an ongoing debate. I thought I'd read that the new system was supposed to streamlline the application process. Not only has that not happened, but it does seem to be weighted in favor of the inventor that has the most patience or deepest pocketbook.
The first-to-file system is unconstitutional, Stadnyk's legal team asserts, because it awards the patent to the person who wins the race to the patent office, rather than to the inventor.
I'll have to find out more about this case. I'm not sure how it can be claimed to be unconstitutional.
The U.S. Constituion states in Section 8 that “The Congress shall have power….to promote the Progress of Science and the useful Arts by securing for limited time to Authors and Inventors the excusive right to their respective writings and discoveries”
It seems like this leaves the decison of a first-to-file versus a first-to-invent system up to Congress to determine. In both cases, however, the patent applicant must establsih that he/she is an inventor. I;m not sure if a constitutionality challenge will prevail. Any thoughts?
@Barbara,
While some of the AIA changes have been implemented as of mid-September, the change to a first-to-file system will not be implemented until March. It's difficult to say how this change will affect the ability to obtain a patent more quickly. At the same time, the USPTO has been increasing their staff of patent examiners to address the backlog, so we have multiple variables changing at nearly the same time. It will probably be hard to tell if the changes streamlined anything, at least for awhile.
With the first-to-invent system, it was strongly recommended that the inventor(s) maintain good records of their ideas and progress in the development of the ideas to workable practice, preferably in patent notebooks. These records needed to be witnessed and dated by two people who understood the invention. If two entities filed for the same invention, these records could establish who was the first to invent, and who was diligent in refining the invention to practice.
Section 8 does say that “Congress shall have power to . . .”, but the phrase “ignore this Constitution and enact whatever it wants” is not on the list. Section 8 is a limitation on the powers of Congress, not a blank check. If Congress has the power to do whatever it wants, then why bother listing specifics in Section 8?
The fact is that Congress cannot simply make laws doing whatever it wants. If Congress believes that a provision of the Constitution should be changed, then there is a process for doing so. The problem is that they know they would lose if they had to openly debate the intellectual property clause, so instead they chose to quietly enact a new law that rewrites the clause, in the hopes that nobody would object. They get away with this all the time because Americans no longer have a working knowledge of nor respect for the document that created the greatest country the world has ever known. This is why America is in deline right now, severe decline, but rather than managing it or simply accepting it as the “new normal”, we must fight it.
If you invented something then it is your property. Period. Doesn't matter who filed the paperwork first. That's what our founders believed, and that is what they said in Article 1, Section 8, Clause 8. It is the ONLY power of Congress that is specifically spelled out as to how it must be applied. Your right to your intellectual property was enacted in 1788. The rights to free speech, freedom of religion, to bear arms, etc. were first proposed in 1789 in the Bill of Rights. In other words, our founders felt this IP clause was so important that it came ahead of all of the other rights we are very familiar with. Yet now our Congress has swept aside 220 years of patent law and this clause, without due process. Even if you don't know the specifics of this case, that fact alone should cause you to call your representative and say, “Excuse me, just what do you think you're doing?” This is your country. Fight for it before it is gone. I am.
Fortunately, the US Supreme Court may get to rule on issues like this although it may be years before a challenge is mounted. Hopefully, the court would do what it was set out to do in a non partisan way.
Dear SP,
There are and have always been mechanisms in place to either help inventors defend their patents or to challenge patent infringement. From what I gather in your note, you seem to be skeptical as to whether any system can completely defend an inventor's patent. I guess the USPTO will say it is doing the best that it can under the legal framework within which it operates. The analogy, although it's an extreme one, is the criminal justice system which has been known to find individuals guilty of a crime and years later evidence surfaces that exonerates the individual. We can't always depend on humans to the right thing, but we must trust humans and the systems that they create, at least some of the time.
Thanks for your response and for reading my article.
Nicole
Dear Eldredge, MadStad & Bolaji,
I am very interested in whether any court finds the first-to-file system of the Leahy-Smith America Invents Act (AIA) to be unconstitutional. There are those who vehemently say yes, and those who strongly disagree. Mr. Stadnyk sees his court case battle as similar to the opposition waged against the Patient Protection and Affordable Care Act, which the Supreme Court recently upheld.
In the New York Times article mentioned in my story, Stadnyk is quoted as saying “Others took on Obamacare, and this is my fight.” He goes on to say: “My property would be given away by the government under this new law.”
Interesting. We will see how far this case goes.
Thanks for your comments.
Nicole
SP, the patent registering offices have their own provisions to check whether the filed in details are forged or original. After that they will publish it for another 3-6 months for collecting opinions and defenses. If anybody has any objection, it can be filed within this time frame.
Thanks Nicole and Jacob.