In the $2.6 billion deal Tech Data did not acquire every asset of Avnet.
William Amelio, interim Avnet CEO, in a conference call with the press and financial analysts, said the embedded computing solutions business as well as its Internet of Things (IoT) group remains at Avnet. The additional cash from the Tech Data transaction will be invested in both areas but specifically towards IoT in developing new routes to market among other initiatives.
“We are now in a position to transform the entire company and we will try to get cost out of the system to grow these areas,” Amelio said.
CDN asked Avnet executives how the company plans to go to market now that their core is embedded computing and IoT? And, if they would continue to act as a value-added distributor?
The company offered this statement:
“As Avnet transforms into a pure-play components distributor, it will build on its years of expertise in embedded computing solutions and providing distribution services tailored for the needs of original equipment manufacturers and electronic manufacturing services providers. Avnet will also continue to build on its momentum in IoT. Partnering on IoT to bring the best solutions to market is something that Avnet has been doing for some time now between Avnet’s Electronics Marketing and Technology Solutions businesses. Avnet’s intent is to develop organic solutions and partner with IoT-related service providers (e.g., analytics, cloud services). This includes continuing a partnership with Tech Data once Technology Solutions becomes a part of their organization.”
That last part is something to make note of. Tech Data has created an IoT special practice inside the company. The new division is led by Victor Paradell, the vice president and global lead of the IoT at Tech Data.
Paradell told CDN that his strategy is to help build the skills necessary to drive IoT growth in the channel. “We see ourselves as a VAD (value-added distributor) that can help with that growth,” he said, in a previous interview.
The IoT market has been pegged by some industry vendors as high as $19 trillion by 2020. McKinsey Consulting has the IoT market between $3 and $11 trillion. IDC believes IoT is right around $2 trillion today and growing to more than $7 trillion by 2020.
Another interesting factor in the Tech Data deal for Avnet is the recent agreement to offer Premier Farnell an all-cash £1.85 per share (roughly £691 million) to acquire the Leeds, U.K.-based distributor of electronic components.
Amelio said the Premier Farnell move will work to strengthen Avnet’s digital footprint worldwide. The Premier Farnell acquisition will also help Avnet’s IoT go-to-market strategy with edge-to-enterprise products and solutions.
“We are still a leading distributor in design and supply chain services. We plan to expand our role in embedded solutions, which is a higher growth segment. We have about a thousand field engineers in this area supporting 30,000 customers around the world,” Amelio said.
He added that there are approximately 445,000 embedded systems in place today and Avnet’s expansion in this area should result in higher margins for the distributor.
As for IoT, Amelio said the potential to add new customers is greater now the company has developed a digital sales tool that taps into the design element of IoT along with test and validation.
“We plan to invest in digital platforms and pending the Premier Farnell acquisition will get wider reach with engineers, the design process and it brings in 300,000 registered users. At Avnet we have many best practice solutions where we add value. And, these can quickly scale across all regions,” he added.
This news hit the industry like wildfire and it seemed that everyone had an opinion on the deal. Here is one such opinion from a key competitor in the value-added distribution space.
Siobhan Byron, the GM of Westcon Canada, said the company was very aware Tech Data and Avnet have announced a plan to merge.
“Clearly the value of distribution and the channel have never been greater as solution providers work to meet their customers’ constantly evolving IT and business needs. At Westcon-Comstor we’re proud to be leading this digital logistics transformation. We’re serving our customers and partners through such things as leadership in Security, helping customers transition to the Cloud, and our capabilities as a truly global distributor in emerging markets such as China,” she said.
Three quick hits before I go. In what can only be considered a surprise move Tara Fine is the new channel chief at VMware Canada. Fine is the Dell Canada channel chief. She replaces Donna Wittmann who has left the Canadian operation in a long-term leave of absence. I’ve been told Wittmann is returning but will have a new role at VMware Canada.
Deidre Deacon is the new GM of Viewsonic Canada. Deacon a long time friend of CDN has been working at the display vendor for close to 18 years most recently as National Sales Manager. CDN wishes Deidre the best of luck.
Kirstine Stewart is leaving her role as vice-president of media at Twitter Inc. to take new role as chief strategy officer with London, Ont.-based pop culture website Diply.com.