Arrow Execs See A Future In Cloud, Services...And Desktops?

It’s been six months since Sean Kerins took over as president of Arrow Enterprise Computing Solutions’ North American business. Kerins, along with Arrow’s vice president of worldwide services Joe Burke, recently spoke with CRN’s Scott Campbell about the last six months and what 2011 holds for Arrow and its VARs. The following are excerpts from the conversation:

Sean, what are your impressions of Arrow’s channel after spending six months on the job?

Kerins: We’ve got some good initiatives under way. I’m pretty pleased with the team and the outlook going forward. In 2010, we’ve slowly dug our way through the recovery, like most. We continue to struggle to change the mix of what historically has been a business based on propriety servers to one of industry-standard servers, storage, software and we’re moving those things forward into new places.

We saw that transition play out through the first three quarters. We managed those transitions well. We continue to see growth around virtualization security, networking, the data center convergence in the future. We’re also looking to diversify around applications to solution-enable our partners. Not in a vendor independent sense, but in helping partners meet customers requirements on the best solution to meet the application requirements.

You mentioned proprietary vs. industry-standard servers? Certainly industry-standard servers grow at a faster rate, but are they getting close?

Kerins: We see the mix changing in our business but proprietary is not going away. The growth may have slowed, the mix may be changing but there’s still value in those platforms to partners and to customers.

Data center convergence, like cloud, has become the buzzword du jour. How do you guys define it and what specific opportunities do you see?

Kerins: We separate this convergence of the data center around data and voice and data, in the confines of the traditional data center, with server, storage, networking and security layers. Like most IT trends, this is still emerging. There a number of visions out there, but this hasn’t hit scale yet. The likes of EMC, Cisco [Systems], VMware are making their best data center convergence plans. You saw IBM buy Blade Network Technologies. Intel bought McAfee. Suppliers are making this their bet as well. We help partners figure out which way the wind blows and how fast to ramp up. We’re realigning our resources in our supplier portfolio. We believe the way you manage storage will be more significant going forward. We’ve got a nice lineup around virtualization and networking, storage and security.

Joe, from a services perspective what are some of the key areas of focus for Arrow next year?

Burke: In 2011, that’s going to be a major area of focus for our organization as we look to align to take advantage of that area. We’ll have more in-depth announcements after the first of the year.

NEXT: How much virtualization opportunity remains? All the research companies indicate maybe one-third of all servers in the market are virtualized now. Does that sound about right with what you see in the market?

Kerins: That’s consistent with what I hear. Thirty-five percent to 40 percent feels right if triangulate everything. Which tells you upside of virtualization alone, ot to mention if you layer in networking and security around that.

But it’s unlikely we’ll every server everywhere will be virtualized. What’s the number that will level off at or how much more opportunity is there?

Kerins: That’s hard to say. It’s a tough call to make. There is definitely more runway to this virtualization trend. But ultimately, the data center of the future, given all the discussion of private clouds and public clouds, will look different. But I think it’s an ongoing journey vs. a moment in time. I don’t see data center reaching a stability where you won’t not see change.

Burke: We’ve also not seen the wave of desktop virtualization. That has not hit yet.

Kerins: There’s also the whole trend of mobility: mobile, personal devices that need to interact with enterprise apps and data. That’s more runway [around virtualization]. We see trends like mobility in the data center, desktop virtualization. We’re very much interested in enabling our partners to succeed. We have to be there [on the desktop] as well.

Does that mean Arrow will be in the desktop PC business at some point in the near future? That’s not an area you’ve ever touched. Would you guys make an acquisition in that area?

Burke: Suppliers want us to participate.

Kerins: We’re not talking about doing any acquisitions, but it would not preclude us from doing whatever investments are necessary, given the impact on data center architecture. We’re actively pursuing to do more in that psacein the future than we’ve done in the past. Burke: The core story hasn’t changed. It’s the whole reason why we broke out services and announced our services initiative in April. Up to now, we’ve been a product-focused company. We looked to the sales force of our resellers, who can take their own services and say how can you help us in that area, both in terms of what to do expand into new areas and actually provide services. The whole Arrow Fusion services initiative became synonymous around our cloud services practice. But it’s not just cloud services. We have education services, consulting service and support practice services as well. Really, it’s around provide a bench for resellers in the consulting area. As they apply their own services, they want to reach out to us. They can staff to valley and get help with the peaks. It’s a natural extension of what we do now.

NEXT: Is The Cloud Real Business or Buzz?

Well speaking of cloud, how is your cloud practice coming? Is there actually business there or just buzz right now?

Burke: We recently signed Terremark. They’re a big cloud service provider. We really are working with them to develop some build-out solutions to take to our reseller base. That tops out investment in bringing cloud providers on board. We have Verio, NetEnrich and MXLogic, now McAfee. We’ve said all along let’s not just try to sign cloud providers to see what happens. We’ll take a slow approach, see what works in the market place.

There’s a lot of enablement around making it work for the channel. I wouldn’t be honest if I said demand was overwhelming yet. There’s still lot of work . Resellers are getting the cloud, but there’s still a mainstay focused on turnkey solutions. We’re looking to provide an avenue for the cost of doing business in the biz cloud to be less than the traditional model. Demand will come sooner or later, when the end user says ’I need a private cloud.’ We intend to take this forward in 2011. We’re pushing resellers on how to integrate different modules, integrate them together. There’s still a lot going on.

Kerins: Like data center convergence, the uptake of cloud is hard to predict. I don’t know if its plays out with any one standard. We see a lot of investment models, we’re carefully placing bets. We’re a big believer this represents a good opportunity from a services perspective. People have to assess certain environments and choose which models make sense and then they have to migrate. All that represents consulting and implementation work too.