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Microchip withdrawing FAEs from distributers - bad decision???

Started by Jim March 20, 2006
Hi

Is it just me or does anyone else think that Microchips latest move 
(removing Microchip FAEs from distributers), is another big mistake? Already 
my companys biggest distributer has decided to stop pushing Microchip 
(because they can no longer provide the full support package), in favor of 
Atmel.

I know that Microchip think that providing all an FAEs function using their 
new online system is more efficient, but aren't they missing something?. If 
the distributers no longer get direct Microchip support then their sales 
position is weakened and their customers may not be offerered a Microchip 
solution in turn.

I might be missing the bigger picture here. Anyone any ideas on why 
Microchip have taken this position?

jim 


Hello Jim,

> > I might be missing the bigger picture here. Anyone any ideas on why > Microchip have taken this position? >
No idea. Sometimes companies decide to go the direct route where support comes directly from the manufacturer. At any rate, support is a vital part of the business no matter how it is delivered. If they keep the FAEs on board this may be ok. Reducing the total number of FAEs is usually not a good idea. There is more than one manufacturer in my past that has lost a major chunk of revenue because they could not deliver support and I had decided to design in competing products. Mostly Europe though. Regards, Joerg http://www.analogconsultants.com
Joerg <notthisjoergsch@removethispacbell.net> writes:

> Hello Jim, > >> I might be missing the bigger picture here. Anyone any ideas on why Microchip have taken this >> position? >> > > No idea. Sometimes companies decide to go the direct route where > support comes directly from the manufacturer. At any rate, support is > a vital part of the business no matter how it is delivered. If they > keep the FAEs on board this may be ok.
Did they have any FAE's at distributors outside the US? certainly we just email Microchip directly, and have never had any problems with that - in fact, you get better late-night service than trying to go through a distie... cheers, Rich, -- rich walker | Shadow Robot Company | rw@shadow.org.uk technical director 251 Liverpool Road | need a Hand? London N1 1LX | +UK 20 7700 2487 www.shadow.org.uk/products/newhand.shtml
Jim wrote:
> Hi > > Is it just me or does anyone else think that Microchips latest move > (removing Microchip FAEs from distributers), is another big mistake? Already > my companys biggest distributer has decided to stop pushing Microchip > (because they can no longer provide the full support package), in favor of > Atmel.
I'd say that's certainly not what Microchip intended, and is probably an 'unforseen consequence' - at least to whichever bean counters made the decision. A bit more obvious cause-effect to us closer to the front lines :)
> > I know that Microchip think that providing all an FAEs function using their > new online system is more efficient, but aren't they missing something?. If > the distributers no longer get direct Microchip support then their sales > position is weakened and their customers may not be offerered a Microchip > solution in turn. > > I might be missing the bigger picture here. Anyone any ideas on why > Microchip have taken this position?
Is it all distis, or just that disti ? I'd have thought the Disti pays the FAE, thus makes the decision, but maybe Microchip pays a portion, or has some other deals going... It may not have been Microchip's decision at all ? -jg
Most semiconductor manufacturers pay an additional sales margin in the form of a 
rebate for distributors who provide tech support and other technical services.

Microchip have effectively revoked this system with the intention of providing the 
technical support and services themselves.

My personal view is that it will provide a short term gain and heavy medium term loss 
for Microchip's market share. What the stock price does over the same period is 
anyone's guess....

Jim, which distributor was that? Avnet?

-Andrew M


"Jim Granville" <no.spam@designtools.co.nz> wrote in message 
news:441f24a9@clear.net.nz...
> Jim wrote: >> Hi >> >> Is it just me or does anyone else think that Microchips latest move (removing >> Microchip FAEs from distributers), is another big mistake? Already my companys >> biggest distributer has decided to stop pushing Microchip (because they can no >> longer provide the full support package), in favor of Atmel. > > I'd say that's certainly not what Microchip intended, and is probably > an 'unforseen consequence' - at least to whichever bean counters > made the decision. > A bit more obvious cause-effect to us closer to the front lines :) > >> >> I know that Microchip think that providing all an FAEs function using their new >> online system is more efficient, but aren't they missing something?. If the >> distributers no longer get direct Microchip support then their sales position is >> weakened and their customers may not be offerered a Microchip solution in turn. >> >> I might be missing the bigger picture here. Anyone any ideas on why Microchip have >> taken this position? > > Is it all distis, or just that disti ? > I'd have thought the Disti pays the FAE, thus makes the decision, but > maybe Microchip pays a portion, or has some other deals going... > It may not have been Microchip's decision at all ? > > -jg >
On Tue, 21 Mar 2006 21:19:04 +1100, "Andrew M" <noone@home> wrote:

>Most semiconductor manufacturers pay an additional sales margin in the form of a >rebate for distributors who provide tech support and other technical services. > >Microchip have effectively revoked this system with the intention of providing the >technical support and services themselves. > >My personal view is that it will provide a short term gain and heavy medium term loss >for Microchip's market share. What the stock price does over the same period is >anyone's guess.... > >Jim, which distributor was that? Avnet? > >-Andrew M
I'm not convinced this is a particularly bad move - web/email/phone is an entirely viable means of support these days, and as others have mentioned can be faster than other means, if done properly (I the last Microchip newsletter I got they mentioned they were about to extend their 24-hour phone support to weekends - how many distis do that..?) Moving to a direct-supply route, bypassing distribution offers the potential opportunity for significant price cuts, and the bottom line for most low-end microcontroller design-in decisions is usually price and availability. Microchip have always been the clear leader in the latter, and perhaps this is a strategy to be more price-competitive against recent low-cost devices from others. I don't buy a lot of PICs directly, but when I have bought the odd thousend chips, Microchip's online store has been cheaper than the distributors I checked. I'm actually rather surprised that the whole distribution model has lasted this long - the net has IMO made much of what they do obsolete. The only exception would be the broad-line guys like Farnell, Digikey etc. who are useful when buying small quantities of a wide range of parts for development and low-volume production, where range of stock and very fast delivery are more important than price. If I were starting a new semiconductor company, I'd bypass distributors, sell direct, offer really good support, and do regular seminar tours for the face-to-face contact that can be useful sometimes.
Mike Harrison <mike@whitewing.co.uk> wrote:


>>My personal view is that it will provide a short term gain and heavy medium term loss >>for Microchip's market share. What the stock price does over the same period is >>anyone's guess....
>I'm not convinced this is a particularly bad move - web/email/phone is an entirely viable means of >support these days,
Me too. I read a magazine interview with Microchips CEO recently (can't remember where) and he was saying that design support was an area they felt was increasingly important and they would be expanding.
>Microchip's >online store has been cheaper than the distributors I checked.
I used it once, worked fine. They show prices and stock and seem to have a lot of stock. Vastly less trouble than spending hours phoning round distributors hoping to find some stock rather than being quoted manufacturers lead times and MOQs.
>I'm actually rather surprised that the whole distribution model has lasted this long - the net has >IMO made much of what they do obsolete.
Not just the NET, when distributors decided it was too expensive to hold stock they removed the justification for their existence. Many manufacturers still need to wake up, when their lead times are longer than design and development cycles and there is no stock in distribution they are not going to get design wins are they? When I search for a part number on the net the number and nature of hits from the far east make me wonder what it is like in that area, they seem to have a vibrant distribution system based on holding and moving stock not talk and moving paper.
Jim <tech@picmodules.com> wrote:
> Hi > > Is it just me or does anyone else think that Microchips latest move > (removing Microchip FAEs from distributers), is another big mistake? Already > my companys biggest distributer has decided to stop pushing Microchip > (because they can no longer provide the full support package), in favor of > Atmel.
One of the few reasons for choosing Microchip used to be their excellent FAE support. It's a curious decision. pete -- pete@fenelon.com [Support no2id.net: working to destroy Blair's ID card fraud]
On Tue, 21 Mar 2006 14:12:42 +0000, nospam <nospam@please.invalid> wrote:

>Mike Harrison <mike@whitewing.co.uk> wrote: > > >>>My personal view is that it will provide a short term gain and heavy medium term loss >>>for Microchip's market share. What the stock price does over the same period is >>>anyone's guess.... > >>I'm not convinced this is a particularly bad move - web/email/phone is an entirely viable means of >>support these days, > >Me too. I read a magazine interview with Microchips CEO recently (can't >remember where) and he was saying that design support was an area they felt >was increasingly important and they would be expanding. > >>Microchip's >>online store has been cheaper than the distributors I checked. > >I used it once, worked fine. They show prices and stock and seem to have a >lot of stock. Vastly less trouble than spending hours phoning round >distributors hoping to find some stock rather than being quoted >manufacturers lead times and MOQs. > >>I'm actually rather surprised that the whole distribution model has lasted this long - the net has >>IMO made much of what they do obsolete. > >Not just the NET, when distributors decided it was too expensive to hold >stock they removed the justification for their existence. Many >manufacturers still need to wake up, when their lead times are longer than >design and development cycles and there is no stock in distribution they >are not going to get design wins are they? > >When I search for a part number on the net the number and nature of hits >from the far east make me wonder what it is like in that area, they seem to >have a vibrant distribution system based on holding and moving stock not >talk and moving paper.
I suspect many of the hits you typically get are actually different people listing the same physical stock though...
Andrew M wrote:

"Andrew M" <noone@home> wrote in message 
news:441fd279$0$4656$5a62ac22@per-qv1-newsreader-01.iinet.net.au...
> Most semiconductor manufacturers pay an additional sales margin in the > form of a rebate for distributors who provide tech support and other > technical services. > > Microchip have effectively revoked this system with the intention of > providing the technical support and services themselves. > > My personal view is that it will provide a short term gain and heavy > medium term loss for Microchip's market share. What the stock price does > over the same period is anyone's guess.... > > Jim, which distributor was that? Avnet? >
Arrow UK.