Switch Distributor Sees Future Growth in Consumer Market
ATEN Technology Inc., the U.S. arm of Taiwan-based computer products maker ATEN International Co., is subleasing 25,000 square feet in the Irvine Spectrum, where it plans to relocate from the Irvine Business Complex.
The 56-month agreement is valued at $1.1 million. ATEN plans to move into the building now occupied by computer and notebook maker Smile International, the U.S. subsidiary of Taiwan-based Kuo Feng Corp. Smile is leaving Irvine to consolidate at its city of Industry location, according to area brokers. It had been in the space less than a year.
ATEN markets cables, extenders, switches and hubs that connect computers and multiple users to servers and peripherals such as scanners and modems. It does no manufacturing here, but rather buys 90% of its product from the parent company, which has factories in Taiwan and China. ATEN sells to corporate clients directly and online through middlemen like Santa Ana-based Ingram Micro Inc. and Aliso Viejo-based buy.com Inc.
The company also recently launched a consumer, home office and small office line under the name IOGear, available initially online and in stores such as MicroCenter and Fry’s Electronics. ATEN hopes to expand that distribution to big retailers in the coming months.
ATEN Vice President Sampson Yang says the company will do about $12 million in sales this year.
ATEN has 32 employees in 5,300 square feet on Aston Street in Irvine and with the move, Yang said, will hire five sales and marketing positions and two full-time warehouse workers, and gradually expand into the rest of the new building.
“We have been growing 100% a year, every year,” Yang said. “We expect the same thing next year and beyond.”
ATEN recently closed a business-to-business deal with Wal-Mart Stores Inc., which bought 3,000 eight-port switches, Yang said. Those typically cost $495 each to corporate buyers. A switch of that kind allows one computer to deal with multiple servers.
In Wal-Mart’s case, it bought switches that can toggle among eight ports, or servers. Yang says they can be arranged so a single computer can work with 512 servers.
Formerly a wholly owned unit of ATEN International, ATEN Technology is becoming a U.S.-based independent company, with three individual shareholders, including Yang, buying 40% to 50% of it sometime in the next two months, he said. It plans to still buy its products from ATEN International.
ATEN also makes cables, hubs and switches that expand a single computer’s universal serial bus ports. For instance, a common ATEN hub turns a single USB port in the back of a personal computer tower into a four-port opening. This allows more peripherals to plug into a single computer.
ATEN targets small- to mid-scale companies with at least four servers. Most switches are for two to 16 servers. Prices are $20 to $800.
Yang says 30% of ATEN sales are generated online and the company’s products are sold on 80% of the “major” online stores.
But Yang expects eventually to place the IOGear product line in larger stores,such as Wal-Mart,to complement the company’s current computer and electronics store emphasis. With more peripheral equipment becoming generally available and consumers more tech-savvy, sales to individuals stand to increase, he said.
“Once people learn more about the USB, our next stop will be the mass merchants,” he said.
Yang says the business has been on the move since the beginning. ATEN launched itself in San Gabriel in 1996, where it stayed a year. It moved to a multi-tenant business park near John Wayne Airport, but outgrew that 1,500 square feet in 12 months, too. It found the Aston Street site in 1998 and has outgrown its space once again.
“We didn’t have too much choice,” he said. “We needed more space and we’ve been looking for a nice ‘image’ building that better represents ATEN. Most buildings are too old for us. On newer buildings, the lease is too high, and there weren’t too many of those available.”
Yang says ATEN needed a good-looking building, even though what it does here is warehouse product until it ships out.
“We sometimes have large customers come in to see us,” Yang said. “And we deal with local online companies such as buy.com and Ingram Micro, too. Plus, the nice image motivates our employees.”
Yang says he never thought of moving out of Irvine in looking for space.
“Irvine is recognized worldwide as a high-tech city,” he said. “A lot of people in Taiwan,people overseas,know about Irvine.”
JR Williamson of Irvine-based tenant representative Nathan Howard Group represented ATEN. Darren Reul and John Goehle of Grubb & Ellis’ Newport Beach office represented Smile International. n
