American Power Conversion Corporation

views updated May 17 2018

American Power Conversion Corporation

132 Fairgrounds Road
West Kingston, Rhode Island 02892
U.S.A.
(401) 789-5735
(800) 788-2208
Fax: (401) 788-2710
Web site: http://www.apcc.com

Public Company
Incorporated: 1981
Employees: 2,650
Sales: $706.9 million (1996)
Stock Exchanges: NASDAQ Pacific
Ticker Symbols: APCC; ACC
SICs: 3679 Electronic Components, Not Elsewhere Classified

Named one of Fortune magazine’s “100 Fastest Growing Companies” in 1996, American Power Con version Corporation (APC) is the world’s leading supplier of power protection solutions.

Start Up, 1981

Founded as a Massachusetts corporation on March 11, 1981, the company manufactures products that improve the reliability and productivity of computer systems worldwide by protecting hardware and data from the ongoing threat of power disturbances through its line of electrical surge protection devices, uninterruptible power supply (UPS) products, power conditioning products, and associated software and accessories for use with computer and computer-related equipment. Protected applications include Internet usage, wide-area networks (WANs), local-area networks (LANs), mid-range computers, home and office workstations, file servers, Integrated Services Digital Network (ISDN) equipment, a variety of consumer electronics, as well as data, network, serial, coaxial (CATV), and telephone lines, and other electronic devices which rely on electric utility power.

The variation or interruption of power to sensitive parts of a computer system may damage or destroy important data or the computer’s set of operating instructions. The company’s UPS products provide protection from disturbances in the smooth flow of power while utility power is available and provide automatic, virtually instantaneous backup power in the event of a loss of utility power, lasting from five minutes to several hours, allowing the user to continue computer operations or conduct an orderly shutdown of the protected equipment and preserve data.

The company markets its products to business users around the world through a variety of distribution channels, including computer distributors and dealers, mass merchandisers, catalog merchandisers, and private label accounts. Major customers include Ingram Micro Corporation, Constellation Energy Corporation (the ninth largest utility company in the United States), Entex Information Services, St. Mary’s Parish School Board (Louisiana), General Motors, and Deloitte & Touche. The company ranks as one of five domestic businesses providing a full range of UPS products and services worldwide in the 0-5 kVA UPS market. The company’s principal competitors in the United States include Exide Electronics Group Inc.; Best Power; a business unit of General Signal Corporation; and Trippe Manufacturing Company. The company also competes with a number of other companies which offer UPS products similar to the company’s products, including Exabyte, Fujitsu, Hewlett-Packard, Lexmark, NEC, Seagate, and Viewsonic.

Located in West Kingston, Rhode Island, the company’s corporate offices are housed in a 166,000-square-foot facility, some of which is also given over to manufacturing capabilities. The company also leases four other facilities in that state: a 95,000-square-foot warehouse in North Kingston, a 334,000-square-foot warehouse in West Warwick, a 75,000-square-foot warehouse and manufacturing facility in Cranston, and a 116,000-square-foot warehouse and manufacturing facility in East Providence. An additional 151,000 square feet of manufacturing and warehouse space is split between two facilities located in Fort Myers, Florida, and the company’s research and development facility located in Billerica, Massachusetts. The company’s primary manufacturing operations outside the United States are located in Galway, Ireland, and in the Philippines. Other major facilities are located in Lognes, France (through the company’s subsidiary American Power Conversion Europe S.A.R.L., this facility provides sales and marketing support to customers in Europe, the Middle East, the former Soviet Union, and Africa and its revenues are in the form of commissions from the Galway operations), and Tokyo, Japan, and the company utilizes third-party warehouse facilities in Australia, Japan, Canada, Singapore, The Netherlands, South Africa, and Uruguay for distribution into its international markets and has sales offices throughout the world.

Products

The company’s growth reflects a similar growth in the UPS industry, itself a result of the rapid proliferation of microprocessor-based equipment and related systems in the corporate marketplace, as well as in small businesses and home environments. Personal computers (PCs) have become an integral part of the overall business strategy of many organizations and are now the workstation of choice in most office environments, as well as in many technical and manufacturing settings. As businesses continue to change their computer configurations from mainframe and remote terminals to linked PCs in LANs, PCs will continue to become increasingly important and it will become even more necessary to ensure that the data stored in, and operating instructions for, PCs are protected from fluctuations in utility power. Businesses are also becoming aware of the need to protect devices such as hubs, routers, bridges, and other “smart” devices that manage and interconnect networks. In addition to the demand that traditional server-based networks create for UPSs, the growth opportunities from the proliferation of peer-to-peer networks (where intelligence is distributed among all the devices in the network, rather than a single server) and wide-area networks (such as the Internet) will further stimulate UPS demand.

The company believes that the increasing awareness of the costs associated with poor power quality has increased demand for power protection products. Complete failures (“blackouts”), surges (“spikes”), or sags (“brownouts”) in the electrical power supplied by a utility can cause computers and electronic systems to malfunction, resulting in costly downtime, damaged or lost data files, and damaged hardware. The company’s strategy has been to design and manufacture products which incorporate high-performance and quality at competitive prices.

The company manufactures over 140 standard domestic and international UPS models designed for different applications. The principal differences among the products are the amount of power which can be supplied during an outage, the length of time for which battery power can be supplied, the level of intelligent network interfacing capability, and the number of brownout and overvoltage correction features. The company’s present line of UPS products ranges from 200 volt-amps (suitable for a small desktop PC) to 5,000 volt-amps (suitable for a minicomputer or a file server cluster). The products can also support work groups utilizing either a LAN or a multi-user system consisting of a host Computer and linked terminals.

Growth, 1993-Present

National Quality Assurance granted the company its ISO 9000 quality seal in 1993 and the West Kingston, Cranston, and Galway facilities have been audited to the even more stringent ISO 9002 standards. Gross revenue for 1993 was $250.3 million, up from $157.5 million in 1992.

In 1994, the company established operations in Galway through a subsidiary, American Power Conversion Corporation B.V. The Ireland facility, a 280,000-square-foot plant at Ballybrit Industrial Estate, provides manufacturing and technical support to better service the company’s markets in Europe, the Middle East, Africa, and the countries of the former Soviet Union. A warehouse facility in Limerick, Ireland, is also used for storage of raw materials.

That year also saw the company expanding its Smart-UPS and Back-UPS families of products. The Back-UPS Pro series of products provide enhanced Back-UPS power protection for advanced workstations. The Smart-UPS v/s products are designed to provide power protection for small business and departmental LANs. In addition, the company developed new Smart-UPS products in the 700, 1000, 1400, 2200, and 3000 volt-amp category. The company also introduced data line surge protection with its ProtectNet product line. Software development achievements resulted in the introduction of new and enhanced versions of the company’s software applications by adding to the number of operating systems with which the company’s software applications were compatible. Gross revenue for 1994 was $378.3 million.

Company Perspectives

American Power Conversion Corporation is dedicated to solving customers’ problems related to the reliability and productivity of information systems by providing innovative and reliable industry-leading solutions through the company’s surge suppressors and related products that buffer computers and other electronic devices from the damaging effects of electrical power failures and surges, including electrical surge protection systems, power conditioners and uninterruptible power supplies.

In April 1995, the company purchased a 41,000-square-foot facility in Billerica, Massachusetts, for $1.2 million, which was then renovated to accommodate growing research and development operations. That same year saw the company introduce 155 new products, including a major transition of its flagship product line, the Smart-UPS, from its five-year-old design to a new third-generation product feature set, including automatic voltage regulation and adjustment, a user-replaceable battery replacement system, and an internal accessory option slot. The company also introduced its Back-UPS Pro product, which was the first UPS product to be “plug & play” compatible with Windows 95, and the Smart-UPS v/s products, a line of UPS products for departmental server applications. Software product introductions included the company’s first advanced UPS/ Power Management software package tailored specifically for the IBM AS/400 environment. The company also reorganized its domestic sales force in 1995 in order to provide a much closer focus on the customer by creating customer units dedicated to specific customer groups. Gross revenue for 1995 was $515.3 million.

Continuing to investigate potential sites for manufacturing expansion in international locations, the company, in June 1996, established a manufacturing operation in the Philippines. The company purchased and upgraded a 70,000-square-foot facility located in a designated “economic zone” for $1.5 million. This facility manufactures some of the company’s Back-UPS products to be sold in the domestic (American) market. In this year, the company’s new product offerings included the Back-UPS Office, which was introduced in the second quarter. This product was designed to be solution-specific to the end user, especially those using the Internet. The company also added additional products which strengthened the company’s position as an overall network solution provider. These products included web management capability with PowerChute plus software, a network manageable power distribution unit, and Masterswitch, which enabled a network manager to control attached loads independent of each other.

The company’s commitment to enhance the overall productivity of its manufacturing facilities led to a reorganization in 1996 of its West Kingston, Rhode Island; Galway; and Philippines locations to move toward leaner, cell-based manufacturing processes in order to increase efficiency, decrease work in process, and improve the overall quality of the company’s manufacturing processes. The company also adopted a “Focused Factories” philosophy aimed at reducing the number of products built in any given location in order to increase efficiency and overall quality.

The company was feted with awards and recognition in 1996, receiving nearly 40, including six for Back-UPS Office, four for Smart-UPS, three for Back-UPS Pro 280, three for Smart-UPS 2200, two for Back-UPS Pro PNP, and two for Smart-UPS 1000.

Major trends which affected the company’s business in 1996 included growth of the Internet and associated web servers, the growth of networking and PCs in international geographies and emerging markets, and the onset of electronic commerce and the commoditization of the server market. Gross revenue for 1996 was $706.9 million, a 37 percent increase over 1996.

In January 1997, the company purchased a second facility in the Philippines for approximately $3 million. Also in 1997, the company entered the above-5kVA power protection market with the Symmetra Power Array. February of the same year saw the company complete its acquisition of Acquired Systems Enhancement Corporation. The seven-year-old privately held St. Louis, Missouri-based manufacturer of power management software and accessories for the UPS market was purchased in a $12.6 million stock swap. That year also saw more awards heaped upon the company, including ComputerWorld’s “Reseller’s Choice” Award, Computer Shopper ’s “Best UPS” Award, PC Bulgaria’s “Editor’s Choice” Award, and, for the sixth year in a row, the company was named “Best to Sell” by The Var magazine in the United Kingdom, bringing the total number of awards the company has received to over 100, more than all other UPS vendors combined.

A Look Ahead

As the computer industry continued to grow rapidly during the late 1990s, the company remained in a choice position to grow with it. In pursuit of this potential continued growth, the company continued to build new and enhance existing relationships with many leading technology vendors, including, in 1997, beginning the ProtectMe! with APC marketing campaign with Dell Computer Corporation, Gateway 2000, and Quantex Microsystems Inc., and a new sales and marketing relationship with Acer Sertek in Taiwan. The company also targeted the Small Office/Home Office market, which it identified as a growth opportunity for the future, and continued to target industries that were becoming more dependent on electronic systems, such as the telecommunications industry. The company also planned to continue to expand its international marketing efforts and manufacturing operations with a full line of internationally positioned products already available.

Principal Subsidiaries

Acquired System Enhancements; American Power Conversion Corporation B.V. (Ireland); American Power Conversion Europe S.A.R.L. (France).

American Power Conversion Corporation

views updated Jun 11 2018

American Power Conversion Corporation

132 Fairgrounds Road
West Kingston, Rhode Island 02892
U.S.A.
Telephone: (401) 789-5735
Toll Free: (800) 788-2208
Fax: (401) 789-3710
Web site: http://www.apcc.com

Public Company
Incorporated: 1981
Employees: 6,365
Sales: $1.46 billion (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: APCC
NAIC: 335999 All Other Miscellaneous Electrical Equipment and Component Manufacturing; 333319 Other Commercial and Service Industry Machinery Manufacturing

American Power Conversion Corporation (APC) designs and manufactures power protection and management solutions for computer, communications, and electronic applications. APC helps customers overcome problems with erratic electricity, making a wide range of products that serve as backup power supplies and analyze energy consumption and quality. The company's core product is an uninterruptible power supply device that regulates the flow of utility power. APC's uninterruptible power supply products range in price from $29.99 to $210,000. The company manufactures its products in the United States, Brazil, China, India, Ireland, the Philippines, and Switzerland.

Origins

APC began as a failure. The company was founded by three electronic power engineers from the Massachusetts Institute of Technology (MIT), two of whom—Neil E. Rasmussen and Emanuel E. Landsman—remained with the company during its formative decades. Landsman spent 15 years at MIT's Lincoln Library before cofounding APC, working in the Space Communications Group from 1966 to 1977 before joining the Energy Systems Engineering Group. Rasmussen joined Landsman at the Energy Systems Engineering Group in 1979, spending two years there before starting APC. APC was founded to make solar power products, but the business idea began to show its fallibility not long after APC was incorporated in March 1981.

The company floundered during its first months of existence, unable to find a product to sustain its operation and precariously reliant on government funding. In 1982, APC, in a desperate attempt to stay alive, began making lead batteries, designing its batteries to serve as backup power supplies to personal computers. The batteries were designed to provide temporary power in the event of a momentary power blackout or surge, thereby giving the computer user time to save data before it was otherwise lost. The foray into lead battery manufacture was a sideline venture, but soon making backup power supplies became the central focus of the company. In 1984, government funding and incentive programs for solar research began to disappear, portending the worst for APC. The company's management responded by introducing its first uninterruptible power supply (UPS) product the same year. The 750, using a lead-acid battery, provided power surge protection and backup power for personal computers, local area networks (LANs), and engineering workstations. The decision to shelve its solar power business and enter the power protection business not only saved the company from bankruptcy but also moved it into a market capable of creating a billion-in-sales company. APC became that company, the first company to generate $1 billion in revenue by manufacturing and marketing UPS products.

When APC entered the UPS market, no one either outside or inside the company had any idea how large the market for UPS products would become. The decision to enter the field was a decision to be relished in hindsight. Personal computer usage was in its infancy at the time of the 750's introduction. Computer networking, the Internet, and other factors that fueled the growth of the UPS market trailed considerably further behind the maturation of the personal computer market. The nascence of the markets that would come to depend on UPS technology helped APC considerably during its early years, allowing the company to secure a foothold without fear of competition from large computer companies. Further, the technology inside the 750 and its successors discouraged competition from another direction. The power supply of a UPS consisted of a lead-acid battery, circuitry designed to even out surges and lulls in the power, and a switch to detect a lapse in incoming power and automatically turn to the battery for backup. The electronic circuitry in the power supply discouraged conventional battery makers from entering the business. APC was shielded from larger, more established competition by the nature of its business, allowed to operate freely in a market perceived to be too small to entice computer companies and too sophisticated to seduce battery manufacturers into entering the fray.

Dowdell's Arrival in 1985

APC's advantageous position perhaps would have been worth nothing were it not for Rodger Dowdell, Jr. Though not a founder of the company, Dowdell was a particularly important figure in APC's history. Dowdell joined APC as its president in August 1985, beginning an enduring length of service that would see him preside over the company for more than two decades. For nine months before his appointment as president, Dowdell worked as a consultant for APC, developing a marketing and production strategy for UPS products. Before that, he served a six-year term as president of Independent Energy, Inc., a maker of electronic temperature controls.

Dowdell's strength was in manufacturing. He knew how to achieve optimal efficiency in manufacturing a product, a skill that would serve APC well as it established itself in its fledgling market and later as it contended with the pressures of a burgeoning market. Within months of becoming president, Dowdell directed the company's manufacturing operations to be moved from alongside Massachusetts Route 128 to Peacedale, Rhode Island. By moving to Rhode Island, Dowdell gave the young APC several advantages. Tax incentives were part of the benefits of a Rhode Island manufacturing base, where real estate was inexpensive and skilled labor was available. Dowdell was an executive, not an engineer, and his emphasis on reducing operating costs to increase profit margins helped APC gain its footing in a soon-to-be lucrative market. The company also was aided by a quality product. In 1986, the year APC relocated to Rhode Island, the 750 was awarded the "Editor's Choice" award by the influential trade publication PC Magazine. APC ended its fifth year of business with its product on the map and its manufacturing facility situated in an ideal geographic location.

During the latter half of the 1980s, the use of personal computers in corporate settings and the networking of personal computers proliferated. Data was flying from desktop to desktop in increasing volume, its vulnerability to erratic electricity threatening a major crisis to any business reliant on computers. Power protection was a necessity, and APC began to reap the rewards of its leading position in a once miniscule market. To keep pace with the growth of its market and to exploit it to its fullest potential, APC needed capital. Dowdell, realizing the need for an infusion of cash, decided to take APC public in 1988. In July, he completed the company's initial public offering, when the company's stock debuted on the NASDAQ for $7.50 per share.

The energetic growth of the markets APC served ignited APC's own growth. The company's sales increased impressively during the latter half of the decade, rising from $400,000 in 1984 to more than $35 million in 1989. Industry observers took notice of APC's advances and gave new merit to the market for power protection. In 1989, Business Week ranked APC number four on its list of the 100 "hottest" companies in the country, the same year Fortune listed the company as one of the ten "stock superstars of the 1990s" and Inc. ranked the company as number 40 on its list of the 100 fastest-growing public companies in the country. APC had arrived, holding sway with a 30 percent share of the backup power-supply market. Its products, ranging from a $2,000 power supply for minicomputers to a $169 backup for desktops, were respected and coveted, putting the company in an ideal position to grab the lion's share of the power protection business in the 1990s, a decade that would bring phenomenal growth to personal computers and related markets.

Becoming a Giant in the 1990s

The 1990s began with another move of the company's headquarters and an award to APC's influential leader. In 1990, Inc. recognized Dowdell as the magazine's New England "Entrepreneur of the Year," the same year the company moved its headquarters to West Kingston, Rhode Island. A look inside the company's new offices reflected Dowdell's focus on the manufacturing side of APC's operations. The offices, with papers stacked on the floor and only the bare minimum of furniture, belied the success the company was enjoying. All the trappings of a company fast on the rise were found in its production plant, a facility outfitted with an automated assembly line that placed and soldered components onto circuit boards. APC's strength was in its products, and as the 1990s began it possessed the products that would capture the bulk of the decade's business. The company introduced its Smart-UPS brand in 1990, a line of products that grew to become the industry's leading network power protection solution.

APC grew with ferocity during the 1990s, expanding its presence across the globe as sales skyrocketed. The company entered the surge protection market in 1991 and the UPS market for mainframe computers the following year. In 1994, APC made its first move overseas, where most of the company's products would be produced in the future. The first plant was established in Galway, Ireland, and was followed by a plant in the Philippines in 1996. At the end of 1996, Dowdell announced he was planning to build seven new plants in 1997 at a cost of between $10 million and $15 million each. His ambition was justifiable. The $35 million company that exited the 1980s generated $515 million in sales in 1995. A giant in the making, APC was seizing the opportunities produced by the terrific growth of the computer industry.

Company Perspectives:

APC's mission: To create delighted customers by improving the manageability, availability and performance of information and communication systems through the rapid delivery of innovative solutions to real customer problems.

Exponential growth prompted Dowdell to push forward and expand APC's business scope. As the company built new manufacturing plants in Brazil, China, India, and elsewhere, its long-term leader sized up other avenues of growth for the company. In 1998, APC spent nearly $70 million for Silicon A/S, a Denmark-based company that ranked as the third largest supplier of UPS products in Europe. The acquisition gave the company products designed for systems that used large amounts of electricity, such as those found at large data-storage centers and mainframe computer facilities. In 2000, Dowdell acquired EnergyOn.com, an Internet company that allowed customers in deregulated energy markets to shop for the most inexpensive electricity and natural gas prices. The acquisition pointed APC in two new directions, toward e-commerce and toward the energy marketing business. In the years to come, the company was expected to continue to diversify its interests.

As APC made its way in the early years of the 21st century, it exuded enormous strength. The pace of sales growth recorded during the first half of the 1990s continued during the late 1990s. In 1998, APC became the first company focused on UPS products to generate $1 billion in sales, posting $1.1 billion in revenue for the year. The company ended the decade with $1.3 billion in sales and began to demonstrate less vigorous growth at the dawn of the 21st century, as recessive economic conditions and a downturn in the technology sector delivered stinging blows. Despite the absence of frenetic sales growth—difficult to achieve for a company of APC's size—the company stood strong in the early years of the century's first decade, fueling optimism for a successful future.

As APC neared its 25th anniversary, the company stood atop its industry. Revenues reached nearly $1.5 billion in 2003, a year that offered evidence of the company's prowess. In a survey conducted by Computer Reseller News, solution providers selected APC as the winner in the UPS category. The company trounced its competition, emerging the favorite in 10 out of 11 criteria used to judge performance and customer satisfaction. The company's dominance must have provided satisfaction to Dowdell, whose tenure at APC had seen the march of UPS products from the periphery of the computer industry to its center. On the company's web site in 2004, Dowdell reflected on the growth of the UPS market and APC's fortune to have abandoned designing solar power products. "In 1984, when we built our first UPS," Dowdell wrote, "I don't think anyone at APC could have imagined a better scenario for the company than what we are seeing today. Data has become money, and it is flying around the globe, without bounds, at an incredible rate of speed. As a company we could not have hoped for a better business opportunity than one in which network downtime correlates to a loss of revenue."

Principal Subsidiaries

APC America, Inc.; APC Sales & Service Corporation; Systems Enhancement Corporation; APC DC Network Solutions Inc.: American Power Conversion Europe S.A.R.L. (France); American Power Conversion Corporation (A.P.C.) B.V.; APC Distribution Limited (Ireland); APC Deutschland GmbH (Germany); American Power Conversion UK Ltd.; American Power Conversion Sweden AB; APC Australia Pty. Limited; American Power Conversion Portugal, Ltda.; American Power Conversion Spain S.L.; American Power Conversion Italia S.R.L. (Italy); APC Korea Corporation; American Power Conversion Hong Kong Limited; American Power Conversion (Phils.) Inc. (Philippines); APC Japan, Inc.; American Power Conversion Brasil Ltda. (Brazil).

Principal Competitors

Liebert Corporation; Powerware Corporation; MGE UPS Systems; Trippe Manufacturing Company; Phoenixtee Power Company Ltd.; Belkin Components; Chloride Power.

Key Dates:

1981:: APC is founded by three engineers from the Massachusetts Institute of Technology.
1982:: To stay afloat, APC begins manufacturing lead batteries.
1984:: APC abandons the solar power business and introduces its first uninterruptible power supply product, the 750.
1988:: APC completes its initial public offering of stock.
1994:: APC establishes its first overseas facility in Galway, Ireland.
1998:: APC acquires Silicon A/S; sales eclipse $1 billion.
2003:: Sales approach $1.5 billion.