Ingram Micro, and other prominent distributors, don’t seem concerned about Tech Data’s $7.2 Billion merger.
Tech data and synnex announced earlier this week that they would be joining forces to create a company worth approximately $57 billion. Their rivals call the massive consolidation a validation of their industry.
Kirk Robinson, the U.S. chief executive of Ingram Micro, gave Channel Futures an optimistic view on the Tech Data merger during an interview.
Kirk Robinson, Ingram Micro
“What a great time to work in this industry. It’s exciting. It’s constantly evolving and changing, regardless of the technology or the landscape,” said he.
Shortly after meeting with Ingram’s Trust X Alliance (an exclusive group of IT solutions providers), Robinson spoke to Channel Futures. He shared with us the same message he gave to the partners: The merger will be beneficial for the channel.
Robinson stated, “The conversation with the partners was, ‘This should be good to for everyone.'”
Robinson stated that resellers will be loyal to Ingram, particularly Trust X members who pay to work with the distributor. Robinson said Ingram would remain the same as Tech Data during the integration process.
Robinson stated, “From our perspective, there’s healthy respect for our competitors, but we know that they’re going be quite busy.” Robinson said, “When a merger such as that occurs, they’re going be busy for quite a while.”
Tech Data has acquired another distributor before. In 2016, Tech Data announced the acquisition of Avnet’s technology service unit. Tech Data’s Asia-Pacific market presence was boosted by the $2 billion-plus deal. It also gave Tech Data additional firepower to challenge Ingram in the market.
Robinson stated that Tech Data’s acquisition of Ingram Micro was a success. Ingram has hired Avnet workers who are a good fit for its culture.
Robinson stated, “We are a competitive team and when Tech Data bought Avnet, we posted some the highest numbers the company had ever seen.”
Are manufacturers and resellers positive about the merger’s prospects? Robinson stated that it depends on how resellers view the merger. Similar to the Tech Data and Synnex relationships, vendors will also differ. Robinson stated that they will need to assess the overlap.
#Cybersecurity Vendors On Board with @SYNNEX–@Tech_Data Merger https://t.co/kbYXo3ofP5
— Edward Gately (@EdwardGately March 24, 2021
Michael Schwab, cofounder of Pennsylvania-based D&H Distributing called the Tech Data acquisition the largest he’s ever seen in the sector. He also shared a positive outlook, much like Robinson. He sees the deal as a significant validation of the distribution business.
Schwab stated, “From my perspective, I don’t think distribution’s ever been valued so highly as it is now, [as] well as] our role in helping the manufacturers facilitate their success.”
Michael Schwab, D&H
Avant Communications CEO Ian Kieninger acknowledged that consolidation is a “maturing marketplace.”
Partners must not overlook the fact that the acquisition signals a significant shift in the market. Schwab stated that cloud-based solutions and services are just as important as product delivery.
IT equipment was historically a bit more transactional. There were switches, routers, notebooks, servers and switches. The product would be in stock. Our go-to market pricing would be competitive. He stated that success would be measured by top-line revenues and the ability to grow each year.
Distributors and partners must now offer more than hardware.
He stated that “We want to keep leaning in to ensure our sell-out capability is more than just the hardware but all the integrated and value-oriented services that accompany it.”
The same trend was observed by MNJ Technologies Chief Operation Officer Benjamin Niernberg.
“We are evolving at a faster pace than ever before and it is urgent that we do so.
Niernberg stated that the shift from traditional hardware sales to service provider and cloud sales will continue.
Schwab, a distributor who specializes in SMB, stated that D&H is committed to keeping trust at the heart of its relationships with partners. According to Schwab, VARs and MSPs working with Synnex or Tech Data may have similar questions as consumers about the acquisition of their bank.
“Is the service going to be as great as it was?” Are my coworkers still part of this organization? He said that all of these uncertainties become more real as time passes.”
He also stated that partners want to have good options for product acquisition and services, as well as sufficient downstream credit.
MNJ Technologies, a VAR-turned MSP, partners with Synnex and Tech Data. It does however do most of its business with Synnex. Benjamin Niernberg, COO, said that he was surprised by the announcement but also stated that he understood the appeal of combining.
MNJ Technologies’ Ben Niernberg
He said, “We’ve witnessed massive consolidation in technology space, so it was not surprising to see the first large distribution arms merge to consolidate and — let’s face it — compete against Ingram which was the largest,”
He stated that MNJ could reap the benefits of the combined company’s greater geographical reach.
“Tech Data is more global than Synnex from a global perspective. It gives us more power,” Niernberg stated.
Tech Data and Synnex complement each other through their OEM relationships. Tech Data, for example, has strong relationships with Dell EMC and Cisco. Synnex has a strong HP and Lenovo relationship, while Synnex has a strong HP relationship.
Niernberg stated that “it’s bringing together businesses with varying strengths and different technologies.”
Niernberg stated that Tech Data and Synnex have very different cultures. He stated that he was “cautiously optimistic” that the merger would go smoothly and not cause any problems for end users.
Synnex has had a customer-first culture since its inception and their top executives have done everything they could to make that happen. It’s evident that there is a strong culture in the company, and I am curious to see how it will continue.”
Schwab agreed that there is a shift in the industry towards solutions-oriented consolidation, pointing to recent acquisitions of Palo Alto and HPE.
“I am not sure how much consolidation could continue, but it is just the nature and character of the industry. Niernberg stated that he believes companies with different strengths will continue to merge to compete in the same space.
Kieninger stated that the shift from hardware-based premises to cloud-based solutions is changing how agents work. Agents in telecom will have to adopt a more consultative approach to customers and less on product sales.
Avant Communications’ Ian Kieninger
Kieninger stated that this will mean that legacy partners or new channel partners will need to be able to adapt their business models to ensure the solution is taken to market in a different way. “… As more cloud-based technology providers bill customers directly through their websites, partner commission models are gaining popularity and have become popular among the channel community.
Kieninger referred to ScanSource’s historic 2016 purchase by the master agent Intelisys. Kieninger stated that the move was an acknowledgement of the shift away from hardware sales.
“It was smart for ScanSource that they found a model that focused on cloud-based distribution and supported by a residual compensation model. Kieninger stated that ScanSource’s CEO believes the model could be worth more than their entire hardware business.
Kieninger stated that the future is bright for channel partners.
He said, “This community continues its evolution while providing more sophisticated expertise support than in the past.” These companies will be a resource for IT leaders and CIOs as they make purchasing decisions for the next generation of technology.
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Matt Ogden is MNJ’s Chief Operating Officer. Matt is widely recognized as the voice of the customer. He was, in fact, a customer of MNJ for 14 years. MNJ customers trust Matt for his command of IT and Digital Transformation within the context of optimized business outcomes.
Matt bridges the gap between legacy technology environments and practical future state success. He has a rare ability to meet the customer where they are and build high integrity, cost effective plans to help technology teams function better. He has even been called a CTO/CIO whisperer. His command of best practices comes from his 14+ years of experience as a leader within the Fortune 19 company – Marathon Petroleum Corporation.
Matt is a Management Information Systems (MIS) graduate from Kent State University. Matt is all about family and invests his free time into them while enjoying coaching and Disney World adventures. Matt is also an avid Cleveland Browns fan.