SAN DIEGO, CALIF. – Synnex is in the midst of phase one of a three phase effort to branch out into high margin mobility services.
The rollout of the global mobility strategy is in phase two in the U.S. market and in phase one in Canada. The distributor plans to kick off phase one of this plan in Japan shortly.
In the Connect area, Synnex will provide point-to-point communications in video, voice, handheld tablets, rugged computing, advanced data capture, POS, rugged slate tablets and even machine-to-machine.
The second area is called Move, which is focused on transport of the information with 3G/4G, fixed line network operator backbone and others.
Finally, in the Control section Synnex is offering protection with encryption and security solutions right at the app layer. This means recruiting different types of vendor partners especially for Government.
The global mobility business unit currently has 63 product lines.
With this new mobility group Synnex has somewhat altered its go to market strategy as a broadline distributor. In the past, all these product solutions were still available at Synnex, however, solution providers had a set of seven different groups to deal with to build an end-to-end mobility solution. Today, Dow said the solution provider has to deal with just one group that increases speed to market that will include activation services.
“The margin opportunities increase with this single business unit. The stickiness of the solutions provide richer margins with services and hardware. We put this group together to make it seamless and easy to do business with so that we both have a go-to-market approach that is first mover. This helps you earn more margins, while reducing your (solutions) investments,” Dow said.
The margin potential with Synnex’ global mobility business unit looks like this:
- Hardware margins range from five to 10 per cent;
- Services margins are between 20 to 30 per cent;
- Activation margin pays between $60 to $80; and
- Switching margin is at 10 per cent.
One of the new business opportunities the Synnex global mobility business unit will attempt to provide is in machine-to-machine. Dow is bringing new vendors such as Cradle Point and Netcom to the channel. These machine-to-machine vendors may provide an alternative to traditional layer 3 products from Cisco Systems for monitoring, security and asset tracking.
These products were in the past out of reach for IT solution providers, Dow said. These machine-to-machine vendors on direct deals with the channel were asking solution providers for hundreds of product unit purchases. Today, through Synnex these products can be obtained in one or two unit skus.
In Canada, the Synnex global mobility business unit will target markets such as forestry and mining, oil and gas, energy, manufacturing, biotechnology, public utilities, transportation, logistics, retail, and healthcare.
“It’s my belief that Synnex is not a broadline distributor. I consider Synnex to be a hybrid distributor that leads to services. We just bought the IBM’s customer care division for more than $500 million. We also have New Age Electronics. This all harnesses the higher end margins,” Dow said.