OutFOX the Competition

OutFOX the Competition

T&I Lee/Collier Runner-up

by Jean Gruss | Editor/Lee-Collier

Engineers at a secret Fox Electronics lab have figured out how to make the heart of computers beat faster and cost less.

Edward Fox Jr. has reason to smile. A customer in Bangalore, India, just ordered $65,000 worth of newly redesigned oscillators from his Fort Myers company, Fox Electronics.

Fox is one of top manufacturers of oscillators in the world, supplying companies such as Dell, Hewlett Packard, Trane, Agilent and JDS Uniphase. These tiny timing devices pace an electronic system much like the heart inside the human body. Oscillators are inside virtually every kind of modern electronic devices, including computers, wireless modems, electronic printers and music synthesizers.

But a few years ago, during the tech wreck, Fox would not have been smiling. "There was a five-year period when it was hard to come to work," Fox recalls.

The company, which came close to going out of business, slashed costs to the point where it even unscrewed every other light bulb to save money on its power bill. But it never cut money for research, which takes place in a secret lab somewhere on the Gulf Coast.

Now that the tech industry is healthy again, the $5 million it invested in its newest oscillator is starting to pay off. It's faster, less costly and can be delivered to a customer in a fraction of the time that competitors can. And orders are starting to come in fast.

Previously, Fox and its competitors made oscillators for customers as orders came in. With its newest product, Fox figured out how to make the part in advance and designed software so it can be customized rapidly in up to 40 different configurations. The result is that it takes just a few days instead of weeks to deliver a batch of oscillators to a client.

What's more, Fox has figured out how to make the device more cheaply and is undercutting its competition by 10% on price. Fox CEO Gene Trefethen hopes that will vault them from the 14th largest oscillator maker in the world to fifth place in five years. "We want to be number five in the world totally by disrupting the oscillator industry," Trefethen says. Already, the company is the largest privately held oscillator maker in the world. The top companies are all publicly held.

Fox has even started to crack the tough Japanese market, where manufacturers rarely buy from foreign suppliers. "They're very nationalistic," Fox says.

The top four oscillator manufacturers are Japanese and control 50% of the world market share.

But Fox's new oscillator is so groundbreaking that two Japanese distributors agreed to sell them, albeit on generous terms. "I couldn't walk in with a me-too product," Fox says.

Fox isn't waiting for the competition to catch up. "We have a two-year window," Trefethen estimates. "We've already started on the next version."

The company ships 100,000 new oscillators a month and its revenues currently are about $30 million a year. In five years, Fox estimates the company will ship 20 million oscillators a month and will book $100 million in sales.

Plans include ramping up production in Fort Myers and producing oscillators in China near FedEx's new plant near Shenzen in the southern part of the country. It already has sales offices in Hong Kong, Taiwan and China and plans to have 250 employees worldwide within five years.

"I'm having fun again," Fox says.

REVIEW SUMMARY

Company: Fox Electronics

Trend: Making computer components faster and less costly

Key: Never scrimp on research and development.