Distributors don't usually venture into installation work, but voice/data giant Black Box Corp. is getting into this end of the market fast with a flurry of acquisitions of datacom contractors in the past 18 months.
As more electrical distributors take an interest in the voice/data market, they are finding all types of new competition. They are running into competitors from the electrical field with similar market desires, voice/data specialists with roots in the wire and cable or electronics market, and of course, Graybar Electric Co., St. Louis, Mo., and Anixter, Inc., Skokie, Ill., the two national giants of voice/data.
While electrical distributors are used to coming up against new forms of competition, they have probably never seen a competitor that's part catalog house, part distributor and an installer of sophisticated voice/data systems. That pretty much describes Black Box Corp., one of the fastest-growing distributors in the voice/data market. With the rapid-fire acquisition of 18 voice/data installers over the past two years, Lawrence, Pa.-based Black Box Corp., is adding a new dimension to its 33-year-old base in electronics distribution: voice/data installation services.
Earlier this month, Black Box marched into the Florida market with its acquisition of Florida Intranet Group (FIG), a voice/data systems installer with $7 million in revenues. FIG has a market niche in South Florida that includes installation and maintenance services for premises wiring and related networking products.
The acquisition is part of Black Box's long-term strategy of offering building owners and tenants a package of voice/data products and installation expertise. The Lawrence, Pa.-based company tallied $330 million in sales in its most recent fiscal year.
Fred Young, the company's CEO, said in a prepared statement that FIG has a "well established reputation in South Florida for high-quality services." The move to offer on-site cabling is an effort to get a bigger piece of the $175 billion telecommunications market (data networking and emerging technologies). This market is expected to grow to $297 billion by 2003, according to Black Box's annual report.
Allan Marconi, V.P. of sales and marketing, Alpha Wire Corp., Elizabeth, N.J., says he didn't think other voice/data distributors had ventured into installation, but thought the concept seemed like a solid strategy. "It makes a lot of sense if they have all of the components that go into a system," he said.
The publicly held Black Box (NASDAQ: BBOX) is using acquisitions to establish a foothold east of the Mississippi before expanding westward in the U.S. and overseas. The bulk of sales for the company, which has already made acquisitions of installers in Great Britain and Chile, are in North America (57%), but it has customers overseas, too, as sales in Western Europe, the Pacific Rim and Latin America combine to account for 43% of its sales.
Black Box has evolved from a company that relied on its paper catalog to produce sales to one that counts on a Web site with an online catalog and online shopping options to supplement sales. Black Box has a 1,200-page catalog that promotes 12,000 products, including 2,300 new products introduced in the last year. The company is a big believer in private labeling, and it sells about 90% of its products under the Black Box label. Distributors interested in the datacom market should do their homework on this outfit. It's a well-respected player in the business that's growing fast.
Headquarters: Lawrence, Pa.
Key company executive: Fred Young, CEO
Sales: $330 million in fiscal 1999, an 18% increase over 1998.
Markets: While North America accounts for 47% of the company's sales, it has customers in 77 countries.
Customers: End users, 70%; resellers, 21%; and system integrators, 9%. Product mix: Cables and connectors, 30%; non-network switches, 16%; LANs, 16%; modems & muxes, 10%; converters, 6%; on-site services, 5%; line drivers, 5%; video & multi-media, 3%; testers, 2%; power protection, 2%; and other 5%.
Web site: www.blackbox.com
Awards: Recognized by Forbes magazine as one of the "200 Best Small Companies in America," and by the Pittsburgh High Technology Council as one of the 50 fastest-growing technology-oriented companies in southwestern Pennsylvania.
1999 acquisitions: Florida Intranet Group (FIG), Miami, Fla., September, 1999; Key-Four, Inc., Atlanta, Ga., January, 1999; Ohmega Installations Ltd., Newbury, Great Britain, March, 1999; Cable Consultants, Inc., Atlanta, Ga., March, 1999; Comm Line, Inc., Cincinnati, Ohio, March, 1999; Todd Communications, Winston-Salem, N.C., March, 1999; and Aicon Ltda, Santiago, Chile, March, 1999.