Arrow acquisition narrows options for resellers

We’re starting to see more consolidation in the channel, which could mean fewer choices for resellers in distribution partners.

Arrow Enterprise Computing Solutions, which distributes enterprise storage, security and virtualization software, just completed its acquisition of KeyLink Systems Group. So resellers now have one less choice in the distribution chain.

Through this acquisition, Arrow adds about 800 resellers to its roster, and also becomes a leading distributor for HP and IBM enterprise products.

While Arrow says resellers shouldn’t experience much disruption as a result of the acquisition, it will be making changes to management. Just a few days ago, it announced a new management team that combines personnel from both Arrow and KeyLink, and established global business units to oversee its IBM and software business. According to Arrow, the creation of these global business units will help meet partners’ future requirements as customers demand more global services and solutions.

Arrow’s storage group has been renamed the Arrow ECS North American storage business unit, and its MOCA group has been renamed the Arrow ECS North American Sun business unit.

Rumour has it that Arrow is planning to make management changes within its HP business as well and bring in outsiders to run that part of the business. Arrow is one of the largest distributors of HP enterprise products, focused on developing initiatives around fast-growing areas such as blades in the enterprise. HP’s enterprise distributors in Canada are Avnet and Arrow – and previously KeyLink – so now it’s down to two (though Tech Data sells HP’s enterprise storage).

Despite these changes, Arrow says it won’t be changing its coverage model, and it plans to continue with the legacy Arrow and KeyLink sales teams. KeyLink has an integration centre in Cleveland, and the new owner plans to expand its integration offerings to resellers through this facility. Arrow also plans to keep many of KeyLink’s partner-facing tools, though it will likely integrate those into its own offerings this summer.

Some resellers are concerned about these changes, since it means there’s less competition in the distribution chain. Last year, for example, Arrow purchased U.K.-based InTechnology, a storage and security distributor, and completed its purchase of specialty distributor Alternative Technology in November.

Perhaps more vendors will turn to broadline distributors or other niche distributors to broaden their channels for distribution. Or, we could continue to see more consolidation, as niche players snap up smaller niche players. The only certainty is that the distribution channel will continue to change and evolve.

Because, despite the promises that Arrow made to resellers that there would be no changes during the transition, so far, there’s already been a few –- and rumours of more.

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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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