Sum of Parts Adds Up to Whole New Market : High-Tech: Computer Accessories builds thriving business by making components that enhance computers and protect stored information.
Eight years ago when Myron Eichen and his son Paul decided to launch a company to manufacture computer accessories, the entrepreneurial team drew up the following game plan:
Start small with cheap and simple components, make money, and then reinvest it to develop high-technology products that allow versatile personal computers to perform office functions.
Like most budding entrepreneurs who run into unexpected hazards that force them to stray from their original strategies, Paul Eichen says he had trouble following the initial plan “to a T.”
But “we were able to follow our rough outline,” he said.
Starting with mundane computer parts such as cables that link components, the Eichens nurtured San Diego-based Computer Accessories Corp. into a company with a reputation for making quality high-technology enhancement items such as liquid crystal display, or LCD, projection panels that project computer screens onto walls.
The closely held company became profitable in its second year of operation and, since 1986, revenues have been growing annually at a compounded rate of 25% to 30%, said President Paul Eichen. The company declined to disclose sales or profits.
Paul Eichen expects similar growth for the next two years as Computer Accessories plans to supply corporate America with products that enhance the versatility of desktop computers and devices that protect information stored in them.
Indeed, industry experts say that the markets for LCD projection panels, such as Computer Accessories’ Proxima Data Displays, and protection devices such as surge suppressors and backup battery units, could explode in coming years as businesses big and small turn to PCs.
“As small computers become more powerful, more and more business people are using them for critical applications,” Paul said. “They’re no longer using them just to do word processing, they’re using them for their company’s entire accounting purposes. These companies can’t afford to have their hardware damaged, and more importantly, their data damaged by power problems. And, although these new computers are better, often, they’re more sensitive.
“You add that all together and you have one hell of a market” for power protection systems, Paul said.
And, with new computer users losing data each day, protection devices are becoming popular items, industry experts say.
“We’ve all lost information” stored in computers, said Mary Lee Shalvoy, an associate editor at Computer Reseller News, a leading trade publication for dealers and distributors of microcomputer products and software. “As more people turn to computers, the fear of losing data is getting pretty strong. That’s why the power protection market is getting bigger and bigger.”
Two years ago, the domestic market for power-protection equipment, including surge suppressors and battery backup systems, was $152 million, according to industry researchers. In 1990, it is expected to grow to $363 million and, in 1993, experts say, it will become a $633-million market.
Shalvoy and other industry experts expect projection panels to enjoy similar popularity.
“All the fancy things you can do with desktop publishing . . . now with projection panels, what you have on paper, you can project that on a wall,” Shalvoy said. “Anybody who’s making a corporate presentation knows that the flashier you can get, the better off you are.”
In 1987, when LCD projection panels were first introduced, 30,000 units were sold worldwide, according to Paul. This year, that total market figure is expected to reach 150,000 units.
“The next great application of computers is to use them for group communications,” Paul said. “Preparing presentations, for training, for education . . . computers will be at the core for all of this.”
Computer Accessories offers several LCD Data Displays, ranging in price from the $1,200 Proxima Data Display 200 (compatible with computers that have video ports, such as the Apple II and IBM lines); the $2,200 Proxima Data Display MultiMode, which can be used with a variety of computer brands, and the new $6,500 Proxima VersaColor, which projects screens in color.
David Sykes, president of San Diego-based Andataco, a computer peripheral distribution company, said he is planning to buy at least 200 units of Proxima VersaColor.
Computer Accessories’ surge suppressors range in cost from $60 to $120. The company’s battery backup systems cost between $650 to $1,200.
The success of the Proxima product line, which now accounts for 90% of company revenues, has encouraged corporate officials to change the company’s name to Proxima Corp., effective Nov. 1, 1991.
Although the Eichens were always planning to build a company that sold high-technology components, the idea to start with computer hook-up cables came from a friend, Fred Brown, who was then vice president of now-defunct Osborne Computer, which manufactured transportable computers.
“There were no standard hookup cables available at the time,” Paul said. “Cables were packaged poorly, and no one knew what cable was to be used to hook up a particular component. Osborne’s dealers were looking for some help, and that’s when Fred Brown approached my father.”
Myron Eichen--already an established entrepreneur at the time and founder of San Diego-based Brooktree Corp., an integrated circuit manufacturer--seized on the opportunity.
In 1982, the company’s founders--the Eichens, McKenzie Cook and Allan Roshon--raised a little over $1 million to launch Computer Accessories.
From 1985 through August, 1988, the company completed three more rounds of venture capital financing, raising more than $11 million from Salomon Brothers Inc., State Farm Insurance and other investors.
Computer Accessories now employs 270 workers, 110 of whom work in a 23,000-square foot factory in Tijuana. In addition, the company leases a 90,000-square foot plant in San Diego.
