ReplaySecond-time around for Mike Carlucci sees the birth of Arruzzi a specialist distributor which is doing more than just selling products – it is creating demand. NEC was impressed. Richard Wilson reports
If setting up a new semiconductor distribution company can be likened to a form of marriage, then it should be easier the second time around.
Mike Carlucci may not disagree after the launch of Arruzzi, his second distribution start-up with NECElectronics as a flagship franchise. “We’ve done it once before, we have a track record,” said Carlucci.
The “we”he is referring to are Glyn Jones and Chris Shipway, co-founders with Carlucci of specialist semiconductor distributor Sequoia Technology, who are all working together again in the new company.
However, there is more to setting up a new specialist distributor, which can sign up companies such as NECand DallasSemiconductor as it first franchise, than managers with a proven track record. You need a sound business model. This may not be easy to come by in the infamously cut-throat semiconductor distribution sector, but Carlucci believes he has found one.
“There is a demand in the market for a higher level of technical support,” says Carlucci. “It is not just the customers who are asking for it, but also the manufacturers.”
It seems what chip suppliers NEC and Dallas expect of a specialist distributor like Azzurri, is more than simply selling products to established customers, but to create new demand in the market for their chips. Carlucci says that creating a market for products such as microcontrollers, Asics and specialist memory parts is key and he claims that big name suppliers are turning to specialists to provide that when their established broadline distributors disappoint. “The pendulum is swinging back to the specialist,” he points out. “The multi-national distributors are fine to supply product, their skills are in the logistics, but they will not generate new demand in the marketplace.”
That view is shared by NEC’s UKdistribution sales manager, Mark Stanley. “Our strategy is to move towards focused, technically competent distribution. These distributors have the capability to identify opportunities for our micros, Asic, flat panel display and memory products,” says Stanley.
Arguably, the decision to focus your distribution channels more towards smaller specialists than solely on established broadliners is not without its risks. Particularly for a company like NECwhich has a policy of restricting the over all its UKdistribution network
The decision to go with Carlucci and co at Azzurri is even more significant for NEC’s distribution policy, when you realise that to add Azzurri, the chip manufacturer parted company with one of its long established broadliners, Macro Group.
According to Stanley: “Macro is an outstanding broadline distributor, but taking a product to new markets is not their forte.”
Carlucci knows the new company will need to shift product just to create cash flow. However, he is confident that Azzurri’s purposefully restricted franchise portfolio, just USniche flash memory supplier Nexcom Technologies will sit alongside NEC and Dallas, will mean the distributor’s technically qualified sales engineers can spend more of their time working with customers on new product design-ins. A product specific focus which may be lacking in some larger distributors.
“We need day-to-day business to live, but the long term strategy is designing NEC’s non-commodity products, particularly micros and TFTflat panels,” says Carlucci.
Carlucci believes other semiconductor suppliers could learn from NEC’s example, particularly in the policy over stock-holding. Azzurri will not hold any NECstock. Sales will be supported by shipping inventory direct from NEC’s own warehouses. “This is a strategy many other manufacturers should look at and it is indicative of the way in which the shape of distribution is changing,” says Carlucci.
But it is the effective replacing of an established broadliner with a new specialist which is the interesting aspect of the Azzurri/NECrelationship. The risk to NECin the short term may inevitably mean a lose of some of the business that would have gone through Macro. Stanley concedes that this is possible, but he is confident that the long term gains to NECwill far out weigh any short-term effects. “Iexpect 80-85 per cent of that [Macro] business to be secured,” points out Stanley.
“NECare taking the long-term view,” says Carlucci, who believes NECare showing a courage which may be lacking in many other big name suppliers. “Iknow there are other manufacturers out there who want technical distribution but who aren’t prepared to see it through,” he points out.
But he also believes that the pendulum is swinging and that over time more suppliers will balance their broadline channels with the technical specialists who can actually grow the market cake. “Semiconductor manufacturers need a focused distribution strategy. It is a mix of broadline and specialist. Over the years there will be a shift in emphasis,”he says.
And according to Carlucci, what is really significant is that “someone as large as NEChas recognised that technical distribution is the way forward.”

Leave a Reply

Your email address will not be published. Required fields are marked *