Avnet Centennial: 100 Years of Making History
Avnet, a Fortune 200 company, was founded 100 years ago, making it one of only a handful of centennials in tech, including companies like General Electric and IBM. From humble beginnings on New York’s famous Radio Row, Avnet has risen to become a global distributor firmly set at the center of the technology value chain and dedicated to helping its customers accelerate technological development. Join us here on a trip down memory lane.
It was the early 1920s. With World War I a memory, New York City’s docks were awash in surplus military and ship-to-shore radio parts. Amateur (ham) radio enthusiasts, intrigued by what they read in popular magazines like Modern Electronics, were putting together crystal set devices, “cat whiskers” of their own from kits. The market for radio components was heating up.
Into this nascent industry came Charles Avnet, a 33-year-old Russian immigrant. He began buying and selling surplus radio parts in 1921, just as the first component stores opened for business on New York City’s Radio Row. Rapid advances in technology soon made radios a common sight in American homes. The Consumer Electronics Association reports that in 1922, 100,000 radios were sold at an average cost of $50. By 1924, the annual factory dollar volume had multiplied tenfold to $50 million, and there were more than 500 commercial radio stations broadcasting nationwide.
Family Reunion: The Avnet family gathers for a wedding reception. Clockwise from top left: Robert Avnet and his wife, Maxine; Joan Avnet and her husband, Lester; Norman and Roz; Helen Avnet and her husband, Charles.
“The Golden Age of Radio was in full swing, and Charles found himself at the heart of it. As radio manufacturing grew, so did the role of parts distributors. From a small store in Manhattan, Charles sold about $85,000 in components his first year in business. When the Great Depression hit in October 1929, Charles, like many others, suddenly found himself in debt. In what would prove an astute decision, he shifted his focus from retailing to wholesaling. Radio remained an inexpensive escape for many. The newest novelty, television sets, were making inroads into people’s homes. Charles dealt in parts applicable to both. Not only did he pay off all his debts, he realized a modest profit. By making good on his loans, he was build ng a reputation of business acumen and honesty that would serve his eponymous company well.
Electronic components became priority defense items as the United States geared up for World War II. Home radio set manufacturing was banned. Component distributors like Charles Avnet turned their full attention to satisfying military and government requests. He opened his first major manufacturing facility on North Moore Street in New York’s butter and egg district in 1944 to assemble military antennas. His son Lester soon persuaded him the future belonged to electrical connectors, which almost every electronic device required.
Do it Yourself: Before World War II, Lester Avnet became convinced that electric connectors were the future, so he set up his own manufacturing plant on North Moore Street in New York’s butter and egg district.
When the war ended in 1945, high quality military surplus was available for less than one-tenth its original cost. The Avnets stocked up. Once they established a team of trained sales engineers, they began manufacturing connectors of their own as well.
The onset of the Korean Conflict in 1950 boosted the fortunes of those with the right inventory of components for military and government use in missile systems, airplanes, and other applications. Bell Labs’ invention of the transistor in 1947 was already fueling an electronics revolution, and the US/Soviet Union space race and international arms race would send the industry into high gear.
California Dreaming
Ten years after World War II ended, Charles, Lester, and his brother, Robert, had a thriving business assembling connectors to customers’ specifications. They incorporated in 1955 as Avnet Electronic Supply Co. with Robert as chairman of the board and Lester as president. Charles took on the roles of vice president and treasurer. In 1956, increasing business necessitated the opening of a facility in Los Angeles to provide more convenient and faster service to the aviation and missile industries, and Robert relocated there. To fund expansion and corner the market on connectors, Avnet celebrated the close of the decade by going public. The company was listed on the American Stock Exchange with the issuance of 175,000 shares of common stock under the symbol AVT.
The invention of the microprocessor and the relationship Avnet forged with its inventor, Intel, and semiconductor suppliers AMD, Fairchild Semiconductor, Motorola, National Semiconductor, RCA, and Signetics contributed greatly to the company’s vigor. Avnet was the first technology distributor to place an order with Intel in 1969. When Intel released the microprocessor it returned the favor, giving Avnet access to related software development and demonstration tools to sell to engineers for their microcomputers – a very profitable venture.
The company commenced the decade not only with an expanded portfolio of semiconductors and other components, but with the fist of many unconventional acquisitions, audio equipment maestro British Industries Corp. (BIC). BIC was just the first in a string of acquisitions that would turn Avnet from a components distributor and manufacturer into a company with expertise in an array of goods, from microprocessors and die casting machines to guitars, perfume bottles, jumper cables, and television antennas. The company described in 1960 as one of the leading national marketers of electronic products would find Electronic Marketing merely one of five groups by the mid-1970s.
An Eye for Art
The Joan and Lester Avnet Collection at New York City’s Museum of Modern Art is a world-class compilation of drawings from some of the most important artists of the 19th and 20th centuries. Although he made a name for himself in the business world, Lester Avnet was a Renaissance man at heart with a long-standing interest in the arts. As a boy, he would stand outside his father’s store singing opera to entice customers in the door. As his family’s company grew, he purchased drawings to foster the creation of a collection devoted specifically to the medium that captured his imagination – drawing. The Avnets donated 180 works to the museum overall, the largest gift of drawings it ever received. The collection features works by Matisse, Chagall, Mondrian, Modigliani, Kandinsky, Braque, Pollock, and Rothko. In 1971, just one year after his death, the museum opened its Department of Drawings devoted to works on paper, most of them donations by the Avnet family.
Pruning Back
Convinced Avnet’s future would be in the field from whence it arose – technology distribution – Tony Hamilton, named CEO in 1980, began a divestiture process, pruning sluggish divisions and product lines and replacing them with technology-related acquisitions and products with high growth potential. The Electronic Marketing Group was already the leading US distributor for semiconductors, connectors, computer products, and passive components, and in many cases it was the single-largest customer of each of its suppliers.
By 1988, computer product sales were so successful that, when revenue exceeded $385 million, the company separated the business and formed the Hamilton/Avnet Computer division. Roy Vallee, who would become CEO in the late 1990s, was named division president in 1989 and the following year led the merger of Hamilton/Avnet Computer (which marketed primarily to manufacturers) and Avnet Computer Technologies (which focused on end users) into a single division, Avnet Computer.
The group hit $1 billion in sales in 1997 and established a headquarters of its own in Arizona in 2000. The acquisition of Savoir Technology in 2000 made Avnet the world’s largest distributor of IBM mid-range computer products. Now called Avnet Technology Solutions, it has evolved into a purveyor of services and solutions for resellers, manufacturers, integrators, and end users. Strong leadership, consistency, focus, and a successful business model have built what started as a side business into one of the best computer businesses in the distribution industry.
In the late ’80s and early ’90s, Avnet under its new chairman and CEO Leon Machiz began a spate of acquisitions that would turn it into a global technology distribution leader.
The purchase of the Access Group, a UK semiconductor distributor, in 1991, and two other semiconductor specialists, France’s FHTec Composants and Scandinavia’s Nortec, secured a place in three of Europe’s five largest markets. Avnet went on to acquire companies in Italy, Ireland, Germany, and the Netherlands, along with a number of panEuropean distributors. The crown jewel was the 2000 acquisition of RKE Systems and Europe’s leading semiconductor distributor, the EBV Group (EBV Elektronik and WBC). Part of Germany’s VEBA Electronics Distribution Group of companies, the deal was unprecedented in that Avnet and its number one rival, Arrow Electronics, cooperated on the purchase – Arrow took a North American subsidiary – to further consolidate the industry.
A Little Help from Our Friends
Avnet’s acquisition of Guild Musical Instruments in 1965 was one of many in the consumer products market. An Avnet/Guild vice president presents a Guild Starfire 12 to The Beatles’ John Lennon and George Harrison.
Avnet Design Services (ADS), established in 1997, grew out of a simple customer request in New Zealand for an Avnet engineer to help design a new product. Now its customers are a Who’s Who of cutting-edge companies, including General Dynamics, Emulex, and Garmin. ADS provides engineers with technical advice on component, hardware, and software solutions, design and prototype services, and test and production assistance. The goal: get customers’ new products to market faster.
The company had been circling around the idea of value-based management since the late 1990s. Quite simply, people need a significant amount of value added to many products before they can buy and use them. In Avnet’s case, that means helping companies with everything from engineering expertise as new ideas come to life to tech support long after products have been manufactured and purchased, not to mention financing, programming, marketing, integrating, and yes, even distributing technology products.
In a global economy, business migrates to the most efficient provider. We intend to be that provider.
Roy Vallee ,Roy Vallee Chairman and CEO of Avnet (1998–2011)
When it comes to designing products, Avnet’s total-systems approach helps manufacturers integrate technology from component suppliers like Intel, Marvell, Maxim Integrated, Microchip, Micron, NXP, ON Semiconductor, Renesas, STMicroelectronics, and Xilinx. Avnet has nine design centers in five countries: China, India, Israel, Singapore, and the United States. Manufacturers rely on Avnet engineers to help them analyze and choose the best component solutions from among the vast array available. Avnet’s engineers also integrate components from multiple suppliers into reference and evaluation kits that solve real-world problems.
Avnet’s innovative culture and entrepreneurial spirit, coupled with its commitment to customer service excellence and its strong business relationships, have assured partners they have chosen well. The company’s global scope and economies of scale, talented people, and focus on value-based management ensure that it will continue to be a leader in the technology industry. Welcome to Avnet’s value creation era!
The Men Who Build Avnet
Charles Avnet, Founder; President 1921–1955
Charles Avnet, a 33-year-old Russian immigrant, opened a small store on New York City’s Radio Row. From his store in Manhattan, Charles sold about $85,000 in components his first year in business. In 1929, Galvin Manufacturing Co. introduced the first practical car radio, the Motorola, short for “motor Victrola”. Charles capitalized on this development, adding automobile antenna assembly and kits to his repertoire and effectively moving from a standard distributor to a value-added distributor putting parts together for sale to consumers.
Lester Avnet, President, 1955–1967; Chairman 1964–1969
Despite the many interests and talents that could have steered him away from the family business, the electronics industry was his destiny, and he poured his considerable enthusiasm into it. He was an expert on electrical connectors, extremely knowledgeable about foundry practice and metallurgy, and was known for bringing children to annual meetings to share his passion about business.
Robert Avnet, Chairman 1955–1964
With the support of his brother Lester, Robert Avnet presided over one of the most dynamic periods in the company’s history. Not only did Avnet more than double the number of assembly plants and sales engineering/service locations by 1964, but it underwent a metamorphosis from a business devoted to electrical connectors to a holding company with interests ranging from electronic components to record albums. Robert inspected radio receivers as a captain in the US Army Signal Corps during World War II. He was also a founder of the Albert Einstein College of Medicine.
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Avnet Centennial: 100 Years of Making History | Avnet Silica
