D-Link Corporation

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Public Company
Incorporated: 1986
Employees: 1,800
Sales: TWD 36.51 billion ($1.10 billion) (2005)
Stock Exchanges: Taiwan
Ticker Symbol: 2332
NAIC: 334119 Other Computer Peripheral Equipment Manufacturing; 334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing; 334290 Other Communications Equipment Manufacturing; 334413 Semiconductor and Related Device Manufacturing; 541512 Computer Systems Design Services

D-Link Corporation is a leading global producer of networking components. Once focused on products for consumers sold through retail outlets, the company has since branched out into the small office and home office (SOHO) and small to medium-sized enterprises (SMEs) channels. D-Link is credited with helping popularize home networking by supplying reliable equipment at reasonable prices. It has powered through the ups and downs of the tech industry to celebrate two decades of consistent double-digit growth.

Revenues have been evenly distributed geographically between three regions: North America; Europe, Middle East, and Africa; and Asia Pacific and others. D-Link has major production centers in Taiwan, China, the United States, and India.

TAIWANESE ORIGINS

D-Link Corporation was formed in Taiwan on June 20, 1986, by Ken Kao, who would be the company's chairman and CEO. The first product was a network interface card rated at 1 Mbps.

The company went public on the Taiwan Stock Exchange on October 17, 1994, the first networking equipment supplier in the Republic of China to do so. Revenues reached $150 million in the mid-1990s, when the company was shipping five million units per year. It had little name recognition among consumers, however, as its network interface cards and other components were found mostly inside assembled PCs.

D-Link had built a new facility at Taiwan's Hsinchu Science-Based Industrial Park in 1991. Within a few years, this facility was operating at full capacity, according to Taiwan Business News. The company opened a new $20 million plant in the Guangdong province of mainland China in 1998. Increasing its ties with its northern neighbors, in 2000 D-Link formed a joint venture with China's Legend Holdings to produce networking equipment for the mainland market.

THE INDIAN VENTURE

One of D-Link's most important foreign subsidiaries was in India. This had been set up in Goa around 1993 as Smart-Link Network Private Limited by K. R. Naik, a former designer with IBM India. D-Link bought a 19 percent stake in the venture in January 1995 and it was later renamed D-Link (India) Private Limited.

As India embraced the Internet in the late 1990s, D-Link India began manufacturing dial-up modems. It soon dominated the local market in the face of well-established multinational competitors. Seeking capital to finance an expansion, the company had an initial public offering in 2001. Proceeds funded new manufacturing and research facilities in Goa and Bangalore.

D-Link India had launched a couple of its own joint ventures in 2000. These brought a couple of other Taiwanese companies to outsource manufacturing to India. D-Link partnered with Lanner Electronics to develop products for the industrial market, and a joint venture with Gigabyte Technology was established to produce motherboards. Another joint venture, D-Link Info-Tech Pvt Ltd, was set up to produce networking software. D-Link India also introduced a line of home products such as webcams and MP3 players for the local market.

PRICE COMPETITION
INTENSIFIES: 1997

A price war in new Fast Ethernet (100 Mbps) components launched by Intel Corp. in 1997 drove American LAN OEMs to outsource to lower-cost Taiwanese producers such as D-Link, reported Electronic Buyers News. D-Link was the largest of Taiwan's 30 to 60 suppliers; the country had total network equipment sales of nearly $2 billion. Though OEM sales were accounting for a growing share of D-Link's business—34 percent in 1998 versus 26 percent in 1997—products the company sold under its own brand offered much higher margins. D-Link was also offsetting the declining profitability of the network cards business by pursuing the high-end switching equipment market.

PC Magazine named D-Link to its list of "100 Companies That Are Changing the World" in 1999. The publication credited D-Link's reliable and easy-to-use equipment with helping to popularize networking among consumers.

Revenues were $394 million in 1999. By this time, D-Link had 1,500 employees at its facilities in California, Taiwan, China, and India. Total factory space exceeded 500,000 square feet. The company was said to be the world's largest producer of networking hubs and the second largest maker of network interface cards. The company's mission was "Building Networks for People"; at the time, it was focusing on individual consumers and the small office and home office (SOHO) market.

D-Link's growth powered it through both the Asian financial crisis and the tech bust a couple of years later. Slow economic times prompted leading network equipment producers such as Cisco of the United States to outsource more production to D-Link and other manufacturers in Taiwan; however, noted Reuters, in 2001 many of these relocated to lower-cost mainland China.

Unlike dedicated contract manufacturers, D-Link (and its nearby rival Accton Technology Corp.) had considerable research and development capabilities. In 2000 D-Link opened a new eight-story facility at the Hsinchu Science-Based Industrial Park. Concerned about the availability of LAN integrated circuits (ICs), the company set up a venture capital unit to invest in suppliers of these components.

COMPANY PERSPECTIVES

Founded in 1986, D-Link is a global leader in the design, manufacture and marketing of advanced networking, broadband, digital, voice and data communications solutions. Following our company motto, "Building Networks for People," D-Link continually meets the global networking and connectivity needs of digital home consumers, small office professionals, small- to medium-sized businesses, and enterprise environments. D-Link's core competency is in Ethernet connectivity. In fact, we are the global leader in providing network connectivity solutions to small and medium-sized business. From the beginning, D-Link engineers have researched, designed and manufactured innovative, standards-based networking solutions. We sell our state-of-the-art hardware at the best prices. Price may be the deciding factor for many new customers, but D-Link innovation, reliability and service keeps them loyal year after year.

D-Link was developing new peripherals to exploit the potential of broadband internet. In 2000 it signed an agreement with California's Clarent Corp. to make routers for handling Voice over Internet Protocol (VoIP) calls between different networks. D-Link was at the forefront of bringing wireless routers to the consumer market as well as supplying broadband modems for DSL and cable Internet.

The company was involved in what was called Taiwan's most visible industrial espionage case to date. An executive allegedly stole software coding while employed at D-Link and transferred it to his previous firm, VIA Technologies, which he ultimately rejoined. Charges were brought against him in 2003; the chairman of VIA was also accused.

GEOGRAPHIC ADJUSTMENTS
AFTER 2002

The company's rapidly expanding OEM manufacturing operations were separated from its D-Link brand business and organized into a subsidiary called Alpha Networks Inc. in 2003. Alpha took over the plants in Hsinchu and Dongguan, China, and started out with 1,250 employees.

In 2003 the U.S. subsidiary, D-Link Systems Inc., moved its headquarters from Irvine, California, to a roomier facility in Fountain Valley. It then had roughly 235 employees. The U.S. office designed a number of D-Link's global product lines. D-Link had passed rival NETGEAR, Inc. and was narrowing the gap on U.S. market leader Linksys (acquired by Cisco Systems, Inc. in June 2003) for leadership of the U.S. wireless LAN products market.

D-Link India controlled more than half of India's market for networking equipment. This operation made cables, switches, and modems and was introducing VoIP phones, wireless routers, and other web-oriented accessories. D-Link Corporation had increased its stake in India to 36 percent.

D-Link was expanding into Eastern Europe, opening subsidiaries in Hungary and Poland in 2002. Ventures in Bulgaria, Romania, and Croatia followed a few years later.

D-Link Corporation achieved sales of $1.0 billion (TWD 39.7 billion) in 2005; the U.S. unit accounted for $425 million. The firm counted 1,800 employees overall and 260 at Orange County-based D-Link Systems. As its main international markets in the United States and China matured, D-Link was looking for sales growth from India and elsewhere. Its products were sold in more than 100 countries overall.

20TH ANNIVERSARY IN 2006

In 2006, the company celebrated its 20th anniversary and two solid decades of double-digit growth. Not content to be the leading supplier of networking equipment for the SOHO (small office and home office) market, the company was also vying for customers among small and medium businesses (SMBs). This segment was supplied by system-integration vendors rather than retailer channels. D-Link's offerings for larger enterprises placed a great emphasis on security features, while aspiring for seamless interoperability with existing wired networks.

The home consumer still accounted for more than half of revenues, at least as far as the North American subsidiary D-Link Systems was concerned. The unit was pushing the "Digital Home" concept; a key new product was a high-speed wireless router for gaming enthusiasts.

Frederick C. Ingram

PRINCIPAL SUBSIDIARIES

D-Link China; D-Link Europe Ltd. (U.K.); D-Link India (36%); D-Link International Pte Ltd (Singapore); D-Link Systems Inc. (U.S.A.).

PRINCIPAL OPERATING UNITS

D-Link North America; D-Link Europe; D-Link APAC; D-Link Greater China.

PRINCIPAL COMPETITORS

3Com Corporation; Accton Technology Corp.; Cisco-Linksys LLC; NETGEAR, Inc.

KEY DATES

1986:: D-Link is formed in Taiwan.
1994:: Company goes public on Taiwan Stock Exchange.
1995:: Company makes initial investment in D-Link India.
1998:: D-Link adds a plant in mainland China.
2000:: D-Link and D-Link India ink deals to develop new products with a number of other companies.
2003:: Manufacturing operations are spun off into Alpha Networks Inc.
2005:: Revenues exceed $1 billion.
2006:: D-Link celebrates two decades of double-digit growth.