Advantech holds a press conference

Advantech held their first ever global press conference yesterday at their World Partner Conference. Dora Chang, Advantech's CFO, Jeff Chen, CTO, and Ming-chin Wu, President of Advantech IAG, and KC Liu, Advantech's CEO attended and presented and answered questions. Dora Chang presented a financial overview of an excellently funded company with a half-billion dollars in revenue, with 3000 employees and no debt. 21% year over year growth was shown, with 21% of revenues coming from Industrial Automation, and 34% coming from Industrial and Network Computing. 29% of revenue comes from North America. Their new emphasis on "eServices" has already reached 17% of revenue. Chang indicated that they would use their "cash cow" Industrial Automation Group to fund the move into other markets: telecom, medical, gaming, real estate intelligence (what the rest of us call the combination of Building Automation and Home Automation), and digital signage. Editor's Note: That works out to more than $30 million in automation revenues from North America, which puts Advantech clearly into the Control Top 50, both for North America and globally. Jeff Chen talked about the move from "application ready" to "service ready" product development. As KC Liu said in his speech earlier, the model is the move from MP3 to the iPod. Ming-chin Wu discussed the status of the core Industrial Automation Group. He noted that the market for PLCs is growing at a relatively slow 7+% per annum rate, but noted that the growth of networked PACs is far higher than the average for generic and traditional PLCs...and that there is a growth opportunity for Advantech there. Ming-chin described the trends he sees as important to the Industrial Automation Group. They included:
  • integrated control, security, safety and information
  • ethernet-- Industrial ethernet is now the dominant networking protocol
  • WWW standards
  • advanced control system architectures
He also talked about something he called "prognostics"-- for "predictive diagnostics"-- and talked about the growing importance of remote machinery monitoring. He said that IAG's core competencies of industrial I/O, embedded control platforms, networking infrastructure and reliance on open control frameworks and standards have positioned Advantech favorably to take advantage of these trends. Then KC Liu opened the floor to questions. Responding to a question about the restructuring into a Globally Integrated Enterprise, he said that the concept allows Advantech to move from being a "products" company to being a "solutions" company. He believes that 2008 will be a growth year for Advantech, after a couple of lackluster performing years. I asked him if he thought that Advantech would be a much larger company if they spent less emphasis on producing new products and more on increasing sales and market share of the ones they have already developed. "Yes," he said, "that's exactly the plan. That's what becoming a solution- and customer-focused company will allow us to do!" I asked about the reorganization of channels, pointing out that every other company in the automation market that has tried to globally integrate both direct sales, third party channels and direct marketing from the Internet has failed at it. KC said that the difference is one of philosophy. They do not want to be the great white shark at the top of the ecosystem, creaming off all the high profit, high revenue projects, while leaving the crumbs for the channels. They intend to invest in, and support the channels, as extensions of Advantech. They intend the DMF project (Direct Marketing Force) to be a support function for both the channels and the direct sales force, not a way to disintermediate the channels to improve profitability. "If we don't use DMF to _help_ our channels, we will fail," KC Liu said. I asked about software. Ming-chin Wu responded that they know they need to improve their position with respect to software. KC said that they would not develop major HMI or SCADA products-- "We're way too late for that," he said. "But there are other products we need to develop, either jointly, or by ourselves." Why did Advantech invite the press to its World Partner Conference for the first time? "We need the exposure, the branding, and we want the press to tell our story to the world," KC Liu said.

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