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Farnell acquires CAD company

Premier Farnell (Farnell) is a leading distributor of electrical and electronic components. In 2009, it acquired CadSoft Computer, a publisher of computer-aided design (CAD) software for the design of printed circuit boards (PCBs). While sales of CadSoft products will in themselves contribute only a small amount to Farnell’s revenues, the acquisition shows how Farnell and its rivals are competing on service as well as price.

Farnell is a leading high service technology distribution company. This means that it offers customers a wide range of electronic parts, with rapid order turnaround and no minimum purchase requirements. Since 2006, Farnell has pursued a three-element strategy: to focus on electronic design engineer (EDE) customers, extend its e-commerce activities, and expand its business in geographic growth markets such as Asia-Pacific.

Its 2009 acquisition of CadSoft exemplifies the first part of this strategy. By offering CadSoft’s Eagle software for PCB design (including freeware options that generate no direct revenue), Farnell is positioning itself as a partner to EDEs. Its element14 electronic design community is another example. Leading competitor Electrocomponents is pursuing similar objectives, with its free DesignSpark software and web community.

Farnell has seen steady growth in e-commerce, which currently generates around half its revenues. E-commerce has lower order processing costs, and is popular with the key EDE customer segment. Since its 2006 entry into China and India, Farnell has seen increasing revenues from Asia-Pacific. Farnell’s strategy looks to be enhancing its profitability, despite recent tough market conditions.

Find this interesting. For more, please read Farnell Case Study: Distributor Acquires CAD Company

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