New Tech Distributors Corp.
New Tech’s Strategy
New Tech’s new line of customized power modules, PowerSelect, is poised
to take advantage of a rapidly expanding market and higher margins. The
outlook for custom power modules used in high-end laptops is strong,
according to New Tech’s own market intelligence and a third-party market
analysis by Market Strategy Partners.
To date, New Tech has grown on the strength of its QuickParts computer
component distribution service. While the market for components is expected
to remain healthy for the next 5 years, long-term prospects are weakening.
New Tech’s goal is to increase the PowerSelect business from 20% to 65%
of its revenues during the next 5 years and capitalize on the higher margins
they provide. Margins in the distribution business are at 55%, while margins
for power modules are at 70%.
In 2001, New Tech projects PowerSelect sales of approximately 1,500
units, producing $1 million in revenues. By 2005, it conservatively expects
sales to grow to at least 7,800 power module units per annum, or $5.2 million
in revenues. Revenues could exceed this level by several times if the company
can leverage its position in this specialized segment of the market to the
broader laptop manufacturing market.
Sales Revenue Growth of 150%
QuickParts 2,400 3,000 3,200 3,100 2,800 2,500
PowerSelect 600 900 1,500 2,700 3,900 5,200
Total sales 3,000 3,900 4,700 5,800 6,700 7,700
Target Market
The overall laptop market is experiencing very robust growth with a good
outlook for the future. According to research by Market Strategy Partners,
an industry analyst, the North American market for laptops has been grow-
ing at 16% per annum over the last 5 years and, over the last 3 years, the
market for high-end laptops has been growing at 20% per annum.
Overall sales of high-end units reached 500,000 in 2000. A power module
for one of these units sells for an average price of $650. Therefore, the total
220 Venture Capital

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