LAS VEGAS — Mitchell Martin, who leads distributor Synnex Canada, wants to move the distributor into the smartphone business and that includes Apple.
It also includes all the other smartphone and tablet vendors as well, but he realizes that Apple will be the hardest one to bring on board. He said that Apple does very well on its own selling through retail and its own Apple Stores. Going forward, however, Martin believes Apple Canada will want to partner with solution providers and that will mean forging an alliance with distributors.
Martin is a firm believer in the bring your own device trend fueled by Apple, and the consumerization of IT phenomenon. This year, Martin and his team positioned Synnex to be able to configure hardware not just for business, but for personal use also.
CDN sat down with Martin at the VARnex conference to discuss this along with other topics. The following is an edited transcript.
CDN: You had a big meeting with Canadian VARnex members. What can you tell me about that meeting?
Mitchell Martin: I showed them our results because I wanted them to realize they were partnering with a winning distributor. I also went into our vision of VARnex Canada and broke that down with some market analysis. I also broke down the total IT SMB marketplace in Canada in segments. There were four key segments: one is the DMR business, national VARs that do a significant amount of medium business, major retail and a lot of small business still go to major retail in Staples and others. This has become a pain point for the vendor community. And there’s the fragmented VAR community, which is eight to 10,000 resellers in Canada. That’s close to half the SMB IT in Canada. This is a part of the market that’s difficult for the vendors to reach. Vendors can manage the top 20 channel partners, so the focus of VARnex Canada is that fragmented market. Our goal is to eventually get to 70 to 80 resellers in VARnex Canada. I’ve done the math here and we think we can address 20 per cent of that fragmented market through 70 or 80 top members.
CDN: VARnex’s goal of $100 million in margin enhancement in the next 18 months for the membership is a pretty big goal. Do you have a specific goal for Canada? There are 32 members currently in VARnex Canada. Will this be a North American mandate?
M.M.: It will be proportional. We’re a big part of the North American distribution business at roughly 20 per cent, which is quite high. So we would pursue about 20 per cent of that goal.
CDN: Why did Synnex want to stick its neck out with this $100 million margin goal?
M.M: We need to measure the success of VARnex. How do we measure success? It will be a series of quantitative and qualitative metrics. Ultimately we want to improve the profitability of the VARnex resellers.
CDN: What are your growth plans for Canada?
M.M.: It’s to continue to gain marketshare in Canada. So we want to grow at a premium of the overall market. I want to leave it at that.
CDN: How much of that will involve consumer business?
M.M.: It’s a major focus for Synnex Canada in 2012 and I believe it’s related to the major retailers. We can improve there. When you look at the collective supply chain costs we think we can, even with our profit, manage the supply chain better than vendors. We did a good job convincing the stake holders on that and we do have room for growth. The more we grow the more efficient we become. And with the small vendors we’re proactive in bringing in new vendors for the connected home opportunity.
We see a big opportunity in tier two retail. Everyone below the majors. With the consumerization of IT all of a sudden people want to bring their own technology to work, and that has to fit inside all the management’s system. We’re in a good place. We’ve historically sold IT products and not played that much in consumer or in smartphones, but more and more those devices are coming together in a digital platform. The expertise we and the IT retailers have puts us in a strong position to be a leader. As a result of that, a lot of resellers are moving into retail and the system builders have embraced retail too, and there are a lot of storefront VARs now. Couple that with all the dot-coms and dot-ca’s; this has become a very real opportunity. We see a lot of growth in that side of the house and it looks to have a bright future.
CDN: One of the big trends this year is the death of the PC and BYOD, or bring your own device. Are you putting any plans in place from a Synnex Canada standpoint to address this market trend?
M.M.: Absolutely! We’ll distribute product that is configured for personal and business apps. We’ll sell those through retail and through VARs. The trend is here and it’s real. It’s also a big challenge for the VARs, the IT managers and the end customers. How can we support this environment? Everyone is showing up with their own personal preference and with tablets being sold left, right and centre with personal apps they want to connect to business systems. They want to manage both with one device and with smartphones, there’s no distinction of devices anymore.
CDN: Would you target Apple Canada and the iPhone?
M.M.: It’s a great opportunity for us to move into the smartphone market. We want to offer it all; all the smartphones, tablets, notebook in any form factor or in niche markets. We’ll look at all of them. It’s possible that we could get Apple. Certainly, Apple is selling a lot of notebooks, tablets and more. But they’ll eventually need to be part of the solution and those solutions are being sold by solution providers with the help of a distributor. They have great success through retail and with their own store. I see them eventually (becoming) more mainstream through the IT reseller channel with all of their technology.
Follow Paolo Del Nibletto on Twitter: @PaoloCDN.
