A Year in Review

It was only a few years ago that distribution’s role in the channel was being questioned. Was there really a need for a middleman in a business that was streamlining itself to fit the Dell model?

Well, we know how that turned out. This year, a number of events occurred in the distribution channel, here in Canada and abroad, that confirms disties are here to stay. Here are some of the top distribution stories of 2007.

1. John Paget’s sudden departure from Synnex

In a move that surprised many industry-watchers, the former president of Synnex’s Technology Solutions Division left to become global president of Avnet Technology Solutions. Paget, who spent much of his career in the distribution channel, was credited with driving Synnex’s focus on higher-end solutions. His new role at Avnet would involve integrating new VARs into an existing distribution channel, as Avnet expanded its business in Europe and Asia. This was seen as a good move for Canadian VARs, since Paget is familiar with the market here.

2. Ingram launches managed services platform

Ingram Micro launched a fully hosted Remote Monitoring and Management (RMM) platform to solution providers in Canada and the U.S. by teaming up with Ottawa-based LPI Level Platforms and SAVVIS. The distributor’s RMM platform was designed to give solution providers a utility-based platform for building out their own managed services portfolios.

3. Tech Data enters managed services market

On the heels of Ingram Micro’s RMM announcement, Tech Data entered the managed services market by forming partnerships with platform providers Ottawa-based N-able Technologies and ConnectWise (N-able would provide remote management and monitoring, while ConnectWise would provide professional services automation). The combined solution was designed to allow solution providers to offer managed services, including security monitoring, IP telephony, e-mail archiving, unified communications and disaster recovery.

4. Arrow completes acquisition of KeyLink Systems Group

Through this acquisition, Arrow added 800 resellers to its roster, and also became one of the top distributors for HP and IBM enterprise products. The distie also announced a new management team that combined personnel from Arrow and KeyLink, and established global business units to oversee its IBM and software business. Arrow’s storage group was renamed the Arrow ECS North American storage business unit, and its MOCA group was renamed the Arrow ECS North American Sun business unit.

5. Martin Kalsbeek leaves Ingram Micro

Martin Kalsbeek, vice-president and general manager of Ingram Micro Canada, announced he would step down by the end of this year, but continued to lead the Canadian operations until a successor was named. Kalsbeek cited a “personal need to spend more time with my immediate family and be closer to my extended family on the West Coast” as his reason for the decision. Kalsbeek oversaw several initiatives, including the launch of the Data Capture/POS, Managed Services and Components and Consumer Electronics divisions in Canada.

6. D&H enters Canadian market

The American distributor, based in Harrisburg, PA, set up shop in Canada this summer, marking its first expansion outside of the U.S. This included a 38,000 square foot warehouse facility in Mississauga, Ont. D&H specializes in emerging trends across IT, entertainment and gaming, with a focus on the small business VAR. D&H felt there was room for another distie in Canada, since it was already doing business with Canadian resellers out of its U.S. headquarters. Greg Tobin, a former Ingram Micro Canada executive, is heading up the Canadian operations.

7. Ingram’s Kevin Murai steps down

When the president of Ingram Micro announced his resignation, many industry-watchers were shocked – since Murai spent almost 20 years with the global IT distributor. He said he’d leave by the end of this year to spend more time caring for his extended family in Toronto. Murai worked his way up the ranks to lead the Canadian, U.S. and North American operations before being promoted to president in 2004 (and went through the 2001 merger that saw Canadian and U.S. operations merge into one).

8. Dell enters channel – and disses disties

Dell officially became a channel player, but didn’t make any plans to go through distribution. This strategy met with mixed reviews. Dell already had direct relationships with many solution providers, who were using its built-to-order capabilities. Others felt that by going through distribution, it would provide a certain level of comfort to VARs that hadn’t dealt with Dell in the past (and were sceptical of Dell’s move into the channel). The big question is what’s next for Dell – since it acts like a mini-distributor in many ways, and could end up competing directly with disties down the road.

9. NexInnovations and Tech Data relationship breaks down

NexInnovations, now part of Softchoice, blamed its demise on Tech Data Canada. Nex’s former CEO and director Hubert Kelly, now resigned, blamed Tech Data for its inability to get out of creditor protection in 2006, when Tech Data became its exclusive supplier. Tech Data, on the other hand, claimed Nex was in default of its obligations. Nex is no more, and Tech Data had to learn a valuable lesson the hard way.

10. Tech Data rakes in profits

The distie brought in US$40.9 million in the third quarter of this year – nearly quadrupling its quarterly profits over last year’s numbers. Tech Data attributed this growth to the distie’s increased focus on the SMB market, as well as better execution. It also brought a new marketing chief on board, Joe Quaglia, who will focus on SMBs and managed services. It remains to be seen, however, if Tech Data will rake in profits next year with the anticipated economic slowdown – or how that will affect the distribution channel overall.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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