Components and Networking company Standard Microsystems Corp is transferring the whole of its systems product division into a new joint venture with Taiwan’s Accton Technology Corp in an attempt to become number two in the midrange, workgroup local area network market, behind 3Com Corp. Standard Microsystems will have only a 20% stake in the new company, SMC Networks Inc, with Accton taking the other 80%, but Standard Microsystems chairman and chief executive Paul Richmond will also be chief executive of the new company, whose structure will apparently change very little from the former systems product division. George Zervos, vice president of SMC Networks European operations, says the rationale behind Acctons majority shareholding is that networking is Accton’s core business and its sole focus. Previously, he says, Standard Microsystems two divisions: components and systems products, had very little synergy, and it was therefore difficult to focus on the workgroup LAN area exclusively. As far as Accton is concerned, he says the company does not have a very strong brand name because most of its business is in the OEM and catalogue business, supplying the low end networking market, so what it gains is the brand name and a strong, well developed sales and distribution channel.
Raft of new products
Geographically, both companies gain from the other, with some 60% of Acctons business coming from the Asia Pacific region, and around 60% of SMCs in the US. Standard Microsystems product division, which represented around 50% of the companys revenues, had got to a point where it was unable to grow, says Zervos, because it could not compete with the likes of 3Com and Cisco Inc at the very high end, nor did it have any low level offerings. Both Accton and SMC produce their own silicon, and Zervos says they now have all the necessary silicon building blocks, including physical layer devices, repeater chips and switch ASICS, or Application Specific Integrated Circuits, to enable them to offer a complete range of products to small and medium businesses at the workgroup level. SMC and Accton worked together on joint development for about a year before setting up the joint venture, and as a result have a raft of new products coming out in the next few months, including a lower end stackable hub product EasyStack, and a managed low end 10/100 Ethernet hub. Standard Microsystems Corp will continue to build its components business, in which Intel Corp has recently taken a stake (CI No 3,125), and Accton will continue to market its low end network products, which the companies say will not compete with SMC Network’s business.
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