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Look for record consolidation in the fast-changing Solution Provider 500 field.
That was the message from CEOs and top executives at some of the country’s best and brightest technology services companies at the two-day CRN SP500 event this week in Charlotte, N.C.
"It's an earth-shaker," said Joe Vaught, CEO of PCPCDirect, an SP500 power that has seen the shifting market put a number of his competitors out of business in the Houston area. "I think we'll see consolidation affecting anywhere from 20 [percent] to 50 percent of the [SP500] players this year."
He sees the shake-out today as similar to the consolidation that took place in the wake of the dot-com meltdown in 2001.
Vaught said the secret to succes is making the move to the next technology turn of the crank. He said he is prospering as a result of reinventing his business to focus on high-performance computing solutions.
In a sign of rising merger and acquisition activity, SP500 company Perficient this month acquired Nascent Systems in a move that will expand its expertise in Oracle E-Business Suite applications and grow its annual revenue to nearly $340 million. Perficient, No. 94 on the list in 2011, has made a half-dozen acquisitions in recent years, including PointBridge Solutions in February and JCB Partners and Exervio Management Consulting in 2011.
"I don't think it is over yet," said one top executive of the merger and acquisition madness in the SP500 field. "All the major vendors are looking for the right companies to do business with right now. It is not how big you are, but how smart you are are and are you making the right investments. You can be a $700 million VAR or a $3 billion VAR, but it still comes down to have you made the right investments."
The right investments, SP500 CEOs said, are centered around fast-growing markets such as cloud computing services, BYOD and video solutions.
One top SP500 executive, who did not want to be identified, said his company's sales will be down an estimated 10 percent this year because it missed out on the BYOD opportunity. SP500 companies that are prospering made big bets on tablet and data center markets, he said.
"You have to be in the iPad market today," said the executive. "The tablet market is very strong."
The economic turmoil in Europe is also forcing consolidation in the market, said the executive. "No one wants to spend money," he said. "I'm worried."