The consolidation continues – this time in Europe.
We’ve already seen increasing consolidation in the North American distribution market – and some say there’s not much left to be acquired here (though there are a lot of smaller unheard-of niche distributors in the U.S. that could be snatched up at some point).
But in Europe there’s still room for consolidation – and even more so in the Asia-Pacific, where too many cooks are stirring the distribution broth.DNS Arrow, for example, is broadening its reach significantly in Europe with the acquisitions of U.K.-based Centia and Scandinavian-based AKS Group. In addition to its British roots, Centia has satellite offices in Germany, France and the Netherlands. AKS is big in – you guessed it – Scandinavia.
These acquisitions will open up the European market to Arrow, particularly in the areas of Citrix, VMware, PlateSpin and Neoware. This will help round out Arrow’s offerings in data storage, management and protection, and comes on the heels of earlier acquisitions, including U.K.-based security and storage distributor InTechnology and U.S.-based enterprise computing disties KeyLink Systems Group and Alternative Technology.
There’s clearly room for global expansion of distribution networks, so we can expect to see continued consolidation in regions outside North America.VARs are often concerned, and rightly so, that consolidation will limit their choices, and give them less flexibility or personal attention. This is a perfectly legitimate concern, since less choice can sometimes lead to less flexibility.At the same time, for smaller distributors like Centia and AKS, scalability is an issue, as is marketing. Being acquired by a player like Arrow gives these smaller disties a larger geographic footprint and more marketing clout – and that clearly is to the benefit of channel partners.
There’s always going to be a trade-off – you might get less personal attention, but you may get a better selection of parts or technical expertise when you need it.
The North American market is already highly consolidated, and Europe is getting there – Asia-Pac is where we’re now seeing a lot of action, and probably will for a while.
The trick for niche distributors is to stay ahead of what’s considered niche, before it goes mainstream. And this often means acquiring those hot technologies.
As for Arrow, a broader global footprint is helping it bring in more revenue and take advantage of opportunities in fast-growing market segments. Its acquisition spree must be working, because its second quarter profits shot up by 17 per cent. And in the tech world, that’s no small number.
So what’s next on the horizon? I’m sure we won’t have to wait long to find out.
