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Canadian VAR worried about Access deal

Avnet to buy competitor with little vendor overlap, but one partner is unsure of benefitsrnrn

Avnet Technology Solutions hopes to gain 100 more Canadian VARs when a deal by its parent company to purchase Access Distribution closes by the end of the year.

Avnet Inc. said it is buying Colorado-based Access from General Electric for US$412.5 million. Both companies focus on serving enterprise customers, but their differences make them an ideal match. Avnet Technology Solutions (ATS) has strong partnerships with IBM and Hewlett-Packard, while Access’s strength is with Sun Microsystems.

If the deal goes through Avnet will have 400 channel partners in this country.

However, one Canadian VAR who partners with both distributors isn’t sure the deal will be good for his company.

“We’re quite concerned because Access is our biggest distribution partner,” said Paul Kerr, president of Scalar Decisions, a Toronto Unix architecture specialist that does about $20 million in annual revenue. The other distributor Scalar deals with is Arrow Enterprise Computing Solutions, a unit of Arrow Electronics.

“Consolidation is good if it’s done correctly, but in some cases having multiple distributors is a good thing for us as well,” he said.

“We’ll have to consider all our options, including moving our business to another distributor, because we may or may not want to stick with Avnet, primarily because of the amount of Sun business we do. They have very little experience with Sun.”

From his perch he can see that Avnet and Access “run dramatically different distribution models.” Both have their advantages, he said, but “GE typically has more staff available to the VAR community. That’s why there’s concern. If they don’t keep that complement, which they aren’t used to, then we’ll have to suffer.”

Rick Hamada, Avnet’s chief operating officer, said in an interview Tuesday that Access VARS should be reassured. “It’s highly likely you’re going to maintain all your existing contacts – your inside sales person, your field sales person and probably the sales management team, so there’s not going to be a turnover there.”

“We’re not going to shake the world up on you,” he said. “Hopefully that’s a comfort to start with.”

Access president and CEO Anna McDermott, who will join Avnet in an unspecified role, said, “Avent is very keenly aware that the opportunity they have in the Sun market and the performance they purchased is based on the expertise and the execution of the people here. So it’s their intention of continuing our Westminster (Colo.) location as their headquarters for their Sun division.”

Kerr, however, said that until he sees details he’s skeptical about the deal’s benefits to Scalar.

“We’re at a loss right now to make a decision,” he said.

Marc Perrella, vice-president of technology at IDC Canada Ltd., said most Canadian VARs of the two distributors won’t see much of a difference to their businesses because there is little overlap in their line cards. (Only two vendors, in fact – Symantec and CA.)

However, he did note that because Avnet is bigger than Access, Access VARs will gain by the new parent’s bigger supply chain and its financing. On the other hand Avnet may gain by an exchange of financing expertise Access sales staff have through their ties to GE’s extensive financing and leasing business.

While GE is a worldwide conglomerate many times the size of Avnet, McDermott noted that Access was stuck in its capital solutions division, which was more interested in leasing equipment than selling IT solutions. Access has revenues of about US$2billion a year, while ATS pulls in about US$5 billion.

Hamada has a simple explanation of why Access partners should welcome the deal: IT distribution “is our life here. It is what we do.”

“We believe (Access) is a very good complimentary fit to our already well-established enterprise distribution business, particularly in North America,” said Hamada, “but we have longer-term aspirations to grow it more globally with Sun. We’re a leading distributor today for IBM, Hewlett-Packard, as well as other enterprise storage vendors such as EMC, Network Appliance.

“We have a small relationship with Sun as a result of its StorageTek acquisition and we were looking to grow that business organically, and this opportunity presented itself to round out the enterprise server portfolio,” he said.

“We will learn some methodology from Access on the way they approached their go-to-market strategies with solutions, how they build, develop, enable a channel for a supplier to sell more complete solutions.”

For McDermott, this is a new step in a career at Access that began 15 years ago when she started with the company as a marketing support rep.

Hamada said she’ll stay at Avnet for at least the next 12 months, and made it clear the company wants to keep her for longer than that.

Comment: info@itbusiness.ca