Leading European distributor aims for a ‘Best Fit’ with power management applications
Central to the distributor’s new strategy is the strengthening of its European team of Power Field Application Engineers (FAEs) with six new recruits who will help to provide applications support to an expanded portfolio of power products and technologies. Avnet Abacus customers will be able to access a number of new consultative schemes to allow their design engineers to discuss the power architecture of each application project.
The 16-strong team of FAEs is being located in every major electronics market in Europe. The newly strengthened team will support the a new ‘Best Fit’ strategy that Avnet Abacus is developing to focus on all aspects of the customers design including electrical specification, industry regulations, product usage, shelf life, reliability requirements, cost, availability and potentially second sourcing before recommending a solution.
Avnet Abacus is a distributor for a number of major power equipment manufacturers including Emerson, Murata Power Solutions, Ericsson, Lineage and Power-One, as well as offering discrete solutions from Power Integrations plus standard and custom battery packs and cells from VARTA Microbattery.
In this news analysis article eeNews Europe Power Management’s editor, Paul Buckley, talks with Graham McBeth, President of Avnet Abacus and Cor van Dam, Avnet Abacus Marketing Director, Power, who is the leader of the company’s expanded team of Power FAEs. The discussion also includes input from a representative of one of the distributor’s key suppliers – Alex Stapleton, VARTA Microbattery’s distribution manager UK and Ireland.
eeNews Europe: What do you see is driving the power sector market forward at the moment from a distributor’s point of view?
Graham McBeth: There a couple of things that are really driving the activity in power. There are a lot of environmental issues that revolve around people having to have increasingly efficient power systems and the power supply that drives that system. That creates a lot of legislative change which is why people are having to conform with rules and guidelines with regard to the power consumption in a system.
Based on those two situations you have now got a lot of customers who are actually having to design new power supplies for systems that actually maybe don’t need to be upgraded. In their world it works just fine but they have to now comply with the legislative and environmental demands. For us it actually fuels a new set of business opportunities that wouldn’t normally exist because people are partly being forced to do it.
On the other hand there are a lot of other organisations that recognise its the future and are choosing to do it. There are also a lot of companies that are also beginning to use their power efficient systems or environmental compliance as a marketing engine for their products.
People can be forced to re-design or volunteer to re-design. There are a lot of people who are recognising that power can be a big part of the cost of their system and an inefficient power supply driving a board can actually be quite a cost issue for them. So now you get people who really recognise that it is one of the areas they have to focus on as the technology on the board continues to be more integrated.
eeNews Europe: So you see the opportunity for real growth in the power sector?
Graham McBeth: We are seeing lots of different ways that this market is growing more than a market would normally grow.
Normally growth comes just from new designs for new products or it is the next generation products entering into the market that stimulate the growth. Here we’re seeing two or three different aspects being added to this situation which for us makes it very exciting.
We believe we have a lot of expertise in this power area. There is also a high barrier to entry now. A lot of customers in this space are digital engineers and a lot of this area is analog. We find a lot of customers who recognise that they have got to go and do something in this area but do not have the expertise.
We are finding that a lot of customers who have got systems up and running and they are just chucking some power through it. They haven’t actually maximized the power efficiency or even made sure they will be environmentally or legislatively compliant while they are designing the boards. They just make the board run and then suddenly they realise they are about to launch a product and now have to go and find an appropriate power supply to drive the system they have created. So often they are coming to us quite late in the day looking to find some advice about the right power supply. That’s where we think we can bring a lot of expertise to a situation.
And a power supply is not cheap. The average selling price of a power supply is more than a Euro. They are pound plus components. It is decent value.
From a business stand point all of the increased health and safety regulations as well as environmental control legislation is good for us.
Cor van Dam: Things are changing with the ‘Green Landscape’. Back in 2004 the 80 plus program started in the US and the reason for this was primarily that in those days if you looked at the power supply of a desktop then the average efficiency of a power supply was 65%. A lot of heat was wasted. And many of these machines were operating seven days a week for 24 hours a day.
When the 80 plus program came on board it meant that over the whole load curve from10%, 20%, 50% to 100% the efficiency of the power supplies now needed to exceed 80 percent efficiency and at the same time needed to have a power factor bigger than 0.9.
In 2007 Climate Savers came on board and adopted the 80 plus program and made it mandatory for data centers. Then the LED market took off and now there will be solid state lighting directives coming because to power an LED is not an easy thing to do.
The life expectancy of a diode or a LED is about 25 years but a power supply, if it is designed properly and used in the right manner, will only last 10 years. So the weakest link is probably the power component and its probably the most expensive part as well.
The power market is exploding and at the moment it has become more a ‘trial and error’ market than anything else. We see many cases were people are having difficulties getting their equipment approved with a CE Mark.
In Europe we now have EuP which is Europe’s implementation of Energy Star and Climate Savers.
People are not waiting for these environmental directives to go live. For industrial power supplies 2015 is the first date to come into effect but believe me ‘green’ sells and a green label on your machine is a key selling point at the moment. There are already a lot of ‘green’ initiatives on the way and customers are not waiting for them to get here.
eeNews Europe: How do you see the power market impacting on your distribution business?
Graham McBeth: We first launched Avnet Abacus in July 2009. We are now fully integrated on one IT platform (SAP) and have been for over a year now. We have two European distribution centres – one in Tongeren, Belgium and one at Newcastle under Lyme in the UK.
For the last calendar year Avnet Abacus gross sales were Euros 315 million. We have 430 employees and 100 of those are field sales people, 150 are internal sales people and we have 55 product specialists. We have nearly 13,000 active customers.
We have 50 pan-European suppliers complemented with some local suppliers in specific countries. Two-thirds of the revenue is with the 50 main suppliers. We are a truly European business with 40 offices in 18 countries. The power business is our fastest growing business. When we started the company Power and Batteries represented about ten percent of the business but in 18 months it has whizzed up to nearly 13 percent and continues to grow.
When we started the company our guiding principle was that we wanted to be a pan-European distributor but retain our local focus. We didn’t want to walk away from the local identity we had and the local franchising we had. For example, the Italians are different from the Brits. They have different market dynamics, different market drivers and different cultures. We just didn’t want to be a big pan-European animal.
We are increasingly trying to take solutions to customers. We believe we have moved beyond just products and are now supplying solutions.
eeNews Europe: So how was business in 2010 and how do you see it going in 2011?
Graham McBeth: Avnet Abacus sales grew 33.5% over the calendar year compared to the previous year and we grew by 39% in the second half of the year.
The book to bill has remained positive through the second half of the calendar year. Even in December 2010 we had a very positive book to bill. The industry continues to roll forward. The first half of the year was up about 28 percent but in the second half of the year we grew nearly 40%. So the growth accelerated.
Lead times continue to be lengthy because most suppliers despite 30%, 40% or 50% growth were reluctant to invest in new facilities. We certainly see that as a trend. There has not been a big rush for suppliers to make massive investments to bring the supply up to meet the demand because of uncertainty about the longevity of the demand.
And the price of gold, copper, tantalum powder, aluminium foil and a lot of things used in the making of the products that we sell are continuing to go up and we continue to see price increases often of the order of seven to ten percent from our suppliers. The rises are largely due to the increase in raw material prices.
As for the outlook for next year I think because the second half of the last calendar year was even stronger than people predicted then there is a genuine belief that it looks like there will gradually be a softening out just because the figures in calendar year 2010 were so high.
Most people are predicting five or ten percent calendar year over calendar year. We are actually seeing good sustained growth all the way through 2008, 2009, 2010 and 2011. If you took out the big dip in 2009 it has actually been a reasonable accumulated growth rate of four percent per year during that period.
eeNews Europe: So what is the thinking behind your ‘Best Fit’ concept?
Cor van Dam: If you look at most of our customers they are design engineers who are mostly digital people. More and more graduates from school are digital people. But power supplies today are still mostly analog. Although there is some digital stuff in there with some digital controllers coming into power supplies.
Traditionally power is still an analog world. So what this means for our customers is that they need more and more help. Customers need a power supply or a DC/DC converter or some power conversion in the system and they don’t know yet what it is but it should fit in there and it should deliver what they need. They are not looking for a brand name yet they are looking for a solution. That’s exactly where we come in with our 16 new applications field engineers (AFEs) across Europe.
We still think you have to talk the local language in the local culture so we are placing the AFEs in each region.
What customers like is that we offer different solutions for each application. So what the customer will get initially is a number of .PDF files from many different suppliers where the customer can choose their ‘Best Fit’ based on their own criteria. So it could be cost, reliability or some other factor. And we will give them a second source if needed.
It saves our customers a lot of time trying to find out for themselves what is available in the market. Although you can find out most things on the Web it takes you a lot of time.
Graham McBeth: The beauty of this ‘Best Fit’ approach for a customer is that when people take this advice the supplier then guarantees the system rather than just the component.
For the customer it is a real step forward in terms of quality and reliability to receive a system guarantee rather than a chip guarantee. Then if they buy all the components from the same distributor they then have a logistics guarantee from the distributor supported by the product guarantee from the supplier.
That’s where the concept fits very well together. If you are a customer that’s very attractive proposition.
Customers are not waiting for new regulations to emerge but are seeking to implement green designs now. Avnet Abacus offers them access to a team of specialist FAEs and a package of other design resources that helps ensure that their next power project has a power architecture that fully meets the current and forthcoming regulations, and is best in class in terms of efficiency and reliability. We go well beyond the traditional distribution FAE role and act as the power design consultant within the customers’ design team.
eeNews Europe: Do your suppliers also have to get used to the ‘Best Fit’ concept?
Cor van Dam: Our suppliers have had to get used to the ‘Best Fit’ concept because they naturally always want the focus on their products but they are not complaining because we generate a lot of business.
To support the ‘Best Fit’ concept you need to have a full product range. We have AC/DC power supplies from a few Watts to a kilowatts and everything that comes with it. We also have a very big offering in DC/DC converters. If you look at the whole powertrain from the mains to the chip set everything is included. We have IBCs as well as isolated and non-isolated POL converters.
We have just signed a big contract with Power Integrations and that gives us access to discrete solutions. Some customers still want to make their own power supplies.
eeNews Europe: What other initiatives are you planning to support design engineers?
Cor van Dam: Avnet Abacus is planning to mark the launch of new strategy with a European road show of power seminars in 2011 supported by presentations from the relevant regulatory authorities as well as its suppliers and Avnet Abacus own FAEs.
Germany is probably going to be the first country to host one of the power seminars. That has yet to be confirmed but it is likely to be around the May 2011 time frame. The road show will then move on to France and UK and other countries later in the year.
We are also launching a new power microsite that will not only offer product information on our full portfolio of power products, but will also be kept up to date with the latest guidelines and legislation information.
The new Web site will also feature an ‘Ask an Expert’ facility and provide a portal to a wealth of supplier resources including manufacturers design call centres, demonstration and test boards, webcasts, application training, and even complete design software including Bills of Materials and specifications for transformers and inductors.
eeNews Europe: How do you see design engineers benefiting from Power Integrations linking up with Avnet Abacus?
Cor van Dam: There is a big, big opportunity for us out there.
Avnet Abacus has roughly 13,000 customers so we reach thousands of design engineers and we offer those engineers a single point of purchase. They can not only buy the Power Integrations chips or the transformers but they can also buy the resistors, the capacitors, the connectors and all those things. Power Integrations has a number of functionalities it can offer the design engineer.
There is the PI University where our staff and customers can be trained, qualified and graduate. The PI University will make sure we tell our customers the right thing about PI products. At the same time Power Integrations offers a lot of Reference Design Kits.
They also offer its PI Expert software tool which can be downloaded off the Web or a CD and at the end the customer can have full schematics file with everything in it. On top of that you will have the specification and sizing for the windings in the transformer and the other inductors. The software tool will populate the Bill of Materials with all Avnet parts. So you can design with PI and buy the product from Avnet Abacus as part of the ‘Best Fit’ concept.
As an example to illustrate primary side integration you can see in Figure 1 there is a board that has been designed traditionally and features 148 components. In Figure 2 is an example making use of two of Power Integrations new products – HiperPFS and HiperTFS high-power product families that cover PFC and two-switch forward, which reduces the component count to 91. It will increase the reliability of the system because less components are used the higher the reliability.
Figure 1: Illustrates Primary Side component integration
with a benchmark board with 148 components.
only features 91 components.
Combining the ‘Best Fit’ concept together with Power Integrations and our new applications team I think we are very well positioned to serve the solid state lighting and consumer white goods markets.
The consumer white goods will probably be the first ‘green’ directive to go live and be mandatory and those people are going to need a lot of support.
Most customers can design their own power supply but to do so to an acceptable efficiency and comply to Platinum, Gold and Silver levels of legislation and to the right quality levels is something different.
Together with our suppliers, Avnet Abacus is able to work with our customers to get their applications approved.
In partnership with Avnet Abacus, customers will be able to ensure compliance with current and forthcoming Eco-friendly regulations while adopting the latest efficient power technologies while gaining access to industry leading manufacturers to bring to market the latest in energy saving power supplies.
For example Power Integrations has already released solutions that address legislation for the existing market. These are what you can use in an existing power supply. You may be able to get up and running with these solutions and get a ‘green’ certificate immediately. The solutions include:
SENZero – A single chip device easily integrated into existing designs to eliminate power losses in the signal paths/channels between high-voltage rails and the controllers of PFC and DC/DC converters
CAPZero – Reduces power losses, it is a simple two-terminal automatic X-capacitor discharger and still meets safety standards
LINKZero-AX – Enables designers to build ultralow standby power supplies, when used in tandem with CAPZero and SENZero reduces standby power waste in high power consumer products as low as 4 mW.
Power Integrations has also introduced nine new power families this year and are taking this compliance opportunity very seriously.
eeNews Europe: Do you think the power sector is going to maintain its growth potential?
Graham McBeth: All things being equal we would expect power to continue to outgrow the rest of the product groups because actually we are getting a regeneration of design activity for existing systems that are working well. The customer won’t re-design the PCB but they will re-design the power supply. So we think it is an above average opportunity that will add an extra dimension to the market.
eeNews Europe: Which of the power technologies is the fastest growing sector that Avnet Abacus is covering at the present time?
Cor van Dam: Batteries are pretty new to us so it is very fast growing and we are taking this whole programme into Europe where Abacus was previously only in the UK. So batteries are the fastest growing at the moment.
AC/DC front ends are also playing a very important role. The average price of a DC/DC converter is going down. The volumes are going up but the average price is going down because so many are coming over from China. From the revenue point of view AC/DC front end is probably now more important to us.
eeNews Europe: How does VARTA Microbattery view the new agreement with Avnet Abacus?
Alex Stapleton: VARTA Microbattery has always taken a clear and simple message when discussing any new partnerships to our distributors that if they are prepared to focus on the battery business then our partnership will really flourish. Many years ago it was Abacus that really met us in that regard and really brought it to the table. Those ideals have been integrated extremely well into the new and larger Avnet Abacus organization. For example Avnet Abacus takes responsibility for the take back and recycling/disposal of batteries in all European markets with the exception of Germany.
Batteries can generally be divided between primary cells and rechargeable products. Primary cells contribute a huge percentage to the disposal and landfill problems we face today. Many applications as a result in the next generations are migrating from primary cells to rechargeable packs to address those issues and to extend the useful life of the battery. We regularly work with Avnet Abacus on that kind of basis offering this to their customers. Normally when we look at this the key point to the customer is to reduce the environmental impact of the battery disposal to them. They want to reduce the associated costs of disposing of those batteries constantly as well as reducing the associated costs of continual battery replacement.
Avnet Abacus’ approach to reducing environmental impact was a key factor in VARTA’s decision to appoint Avnet Abacus as the battery manufacturer’s sole pan-European distributor for its Cell Pac PLUS service, which is VARTA’s custom battery design service for portable and handheld electronic devices for the industrial, medical and communications markets.
Visit the new microsite at www.avnet-abacus.eu/power
Visit Power Integrations at www.powerintegrations.com