Sun VARs: Acquiring Access Right For Avnet

Sun Microsystems' channel partners, along with the vendor itself, said they expect Avnet's pending acquisition of Access Distribution to benefit Sun's channel as it brings the vendor's largest distributor into the hands of an organization focused on the high-tech channel.

However, said some solution providers, the move is not without risks to a large number of Access'customers, VARs that depend on financing from Access to remain solvent.

For Sun's channel partners, the acquisition was no surprise. Rumors have been swirling around the channel that Access would be picked up by either Avnet, which earlier this year picked up a part of Sun's server distribution business; the MOCA division of Arrow Electronics, which is Access' key competitor in the U.S.; or Synnex, whose North America president and COO, John Paget, was formerly the CEO of Access.

A key change for Access as part of Avnet will be taking Sun's biggest distributor from being part of a huge conglomerate to being a stand-alone business under a dedicated distribution organization.

"We all knew the rumors," said John Varel, CEO of FusionStorm, a San Francisco-based Sun partner. "I'm not surprised. I figured GE [General Electric] wanted to be in different businesses, but high-tech distribution was not their first love."

Mark Teter, CTO of Advanced Systems Group, a Denver-based Sun partner and one of Access' top solution provider customers, said the move makes Access a part of a true distribution company, and brings a top-notch organization to Avnet.

"Avnet's getting a great sales and distribution organization," Teter said. "The move's not a big surprise with all the consolidation going on in distribution."

However, Access' business took a hit recently when Sun decided to cut in half the distributor rebate on maintenance renewals, said one solution provider, who preferred to remain anonymous.

"Perhaps Sun's announcement that it was cutting reseller and CDP [channel development partner, Sun-speak for distributor] returns on renewals was the final straw to push GE to push the button on Access," the solution provider said.

Another solution provider said it is still hard to understand why GE ever acquired Access in the first place.

"My personal thought is that GE never liked the business," the solution provider said. "It's a low-profit, high-risk business. Access was even more at the mercies of Sun than we are. They have lower margins than we have. And it was hard for Access to pick up other vendors. I just didn't think it was smart of GE to get into distribution."

NEXT: Did Access Financing Prop Up Weak VARs?