In what might signal a growing trend in the channel, Reptron Electronics Inc. has become one of only a few industrial distributors to acquire a flat-panel integrator.
Reptron last week acquired $18 million Applied Instruments Inc., a third-party integrator based in Fremont, Calif. Reptron will run the acquisition as a third business unit in support of its components distribution business, Reptron Distribution, and its contract electronics manufacturing unit, K-Byte Manufacturing.
"Typically, what has happened is distributors that sell displays have forged third-party relationships with integrators," said Paul Plante, chief operating officer at Reptron. "This model doesn't provide the greatest customer value when the day is done," he said.
That view is shared by Richardson Electronics Ltd., LaFox, Ill., which in March acquired Hudson, Mass.-based Pixelink Corp., a CRT and FPD integrator focused on medical and industrial applications.
Reptron Distribution has been success-ful in selling FPDs to OEMs, but customers have grown weary ofintegrating the displays and performing touch-screen adaptation, according to the company. "They would prefer someone else do that," Plante said.
Indeed, one of Reptron's customers, Sharp Electronics Corp., was pleased with the deal. "In the past, integration has been done by distributors, which is not their core business, and it generally wasn't done through the complete casing," said Ed Markiewicz, vice president of sales at Sharp Microelectronics of the Americas, Camas, Wash.
"Having someone like Applied who can assemble ... will allow companies to outsource it all. We believe this is a good move for Reptron," he said.
A growing number of K-Byte customers are also integrating displays into their end products. Before the latest deal, K-Byte was unable to offer integration services. If a K-Byte customer wanted that assistance, Reptron Distribution bought an integrated display and shipped it to its sister division. The premium was then tacked on to the customer's bill of materials.
"With the acquisition, we'll be able to engage with more customers and add a higher level of business for existing customers," Plante said.
Reptron carries FPDs from Hitachi, Samsung, Seiko, and Sharp, among others. The company intends to add other FPD lines, according to Plante. Currently, 13% of Reptron Distribution's sales are FPD-related. Plante predicts that figure will grow to 20%. Reptron also anticipates that revenue from Applied will increase by 30% "in the foreseeable future," he added.