Not many companies that were bought for £3 have actually managed to survive 20 years in one of the toughest business environments, but CMS Peripherals has stood the test of time.
This is mainly down to the dedication and determination of its managing director Frank Salmon, who begged and borrowed money from friends and family (as well as the banks) back in 1990 to get the company of the ground and turn it into a multimillion-pound powerhouse that was the first UK firm to bring USB flash drives to market.
Sent out to work at the age of 12, Salmon cuts a determined figure with his lilting Irish brogue. He arrived in London in 1984 where he worked in a print and publishing house until 1988, the year he joined CMS, which at the time was selling tape backup drives. The firm was threatened with closure by its parent company two years later, which is when Salmon made his most memorable purchase.
“We generated £1m in revenue in our first year,” Salmon told CRN. “By 2001, we were turning over in excess of £100m. The key was the technology sector that we chose data storage. We focused on data storage and have been consistent with that message ever since.
“We have also remained vendor independent in terms of platforms, which was
important. Over the past 17 years we have averaged 35.2 per cent growth and this
year we expect to achieve 20 per cent growth.”
Salmon said the working atmosphere at CMS has also been a contributing factor to its success.
“We try to create an open environment for our workers and have quite an entrepreneurial flow to the business. People are the key to survival in the market. We have always tried to keep a reality check on the business especially in 1999 and 2000 when distributors were selling for five to 10 times their revenue all on the back of the dotcom boom. We focused on keeping costs down and improving customer service,” he said.
“Over the past five years we have seen commoditisation of storage sold in the business-to-business space, and some of the technology has moved to the business-to-consumer space. For example external hard drives are one of our largest revenue generators in the business-to-consumer space, where historically it has been a business-to-business focus.”
Salmon said the business-to-consumer storage space is growing and stressed that the firm would not venture out of its storage comfort zone.
“We will continue to stay focused on storage as the technology is always evolving and there is an opportunity to create new business channels and add value in different areas. One of our core competencies is bringing new brands to market and we like to see ourselves as visionaries. Our aim is to find the brands before the market finds them and then help those vendors create brand awareness,” he said.
“We hope to continue to seek out new technology and if it is disruptive, we will take advantage. Once a brand or technology becomes mature or it moves into the broadline space, we have to let it go. We build loyalty in the channel by bringing credibility, because we have done our research with our vendors.”
He added that CMS is determined to retain a human touch rather than relying on automation for everything.
“It is the product knowledge and support that resellers need as well as all the high-tech e-commerce systems,” he said.
Despite the talk of broadliners ruling the roost, Salmon said that specialist distributors can offer a more intimate service to vendor partners.
“We spend time evangelising new technologies and vendors and we provide them and their products with a fast track to market. Broadliners cannot do that,” he said.
Clive Longbottom, service director at analyst Quocirca, said CMS Peripheral’s ability to adapt has helped it survive. “CMS Peripherals is a very savvy company that has changed a hell of a lot over the years and has changed its business model with the market. Reading the market correctly and making the right changes are key to survival.”
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