LeCroy recently announced that it would be acquired by Teledyne Technologies and become a subsidiary. When I read this release, I wondered, how will this affect the high-end scope market in terms of the “big three:” Tektronix, Agilent, and LeCroy? Recently, there has been a fair amount of posturing and bandwidth wars, particularly between LeCroy and Agilent, so what does the future hold?
Today I had a chat with Jessy Cavazos, the Industry Director for Test & Measurement Research, Frost & Sullivan. I wondered what she thought Teledyne brought to the party for LeCroy. For my part, I would have expected the company to partner with someone who would give them access to proprietary technologies and components for use inside the scopes. LeCroy reports that it will be using Teledyne’s InP technology to do just that, but it seems like that is not a primary driver behind the move.
Cavazos thinks it comes down to resources. Teledyne has the resources to help LeCroy expand its portfolio and go after more market segments. Not that LeCroy has done a shabby job at that in the past, but more resources could even the playing field a bit with Tektronix (which has the backing of Danaher, which has acquired more than 400 companies since 1994) and Agilent (which is a juggernaut in itself, with annual revenue of $6.6 billion in 2011). For her part, Cavazos thinks the LeCroy/Teledyne arrangement could play out much the same way that the Tektronix/Danaher one has, with the acquiring company taking essentially a hands-off approach to the day-to-day business.
So what’s in it for Teledyne? “For Teledyne, it is an additional way for them to serve their target market (aerospace/defense).” And Teledyne can help LeCroy expand into other instrumentation besides scopes, such as signal generators.
So, how will it affect the ‘big three’? Cavazos notes that Tektronix is already facing increased competition from Agilent (which she rates as #2 in the market behind Tek). Now, for Tektronix this means more competition from LeCroy. For Agilent, it means more competition for its scope products, but also perhaps for other instruments as well, such as signal generators. At any rate, the scope market is heating up and it’s a worthwhile market to be fighting for. Cavazos notes that the market has experienced significant growth over the last couple of years, well into the double digits. Whatever happens next, it is sure to be interesting…What do you think?