Q&A: Tech Data CEO Bob Dutkowsky

Following Tech Data's announcement of record sales for the fourth quarter last year, CEO Bob Dutkowsky spoke with CRN about where the Clearwater, Fla.-based distributor is heading and how it plans to get there.

CRN: To what do you attribute growth in the fourth quarter?

Dutkowsky: The market opportunity remained robust both in the Americas and in Europe. Second, I think our execution was strong -- as strong as it's been in a long time. As an example, we overachieved the objectives in all six regions in Europe in Q4, and I don't think we could make that statement in probably three or four years in terms of overachievement in all six regions in Europe all in the same quarter. I think the opportunity is there and I think our execution was good.

I don't want to not shed light on the Americas business. Our business in the United States was good. Our business in Canada was exceptionally strong, and our business in Latin America was exceptionally strong. It was a quarter where Tech Data fired on all cylinders, and consequently you see us report record net sales.

CRN: A few weeks ago, Tech Data had outages in its Web ordering system. Did that have any effect on your business?

Dutkowsky: We did have some problems, and they were temporary, and they're all back up and running now. In the interim, some of that business that would have come to us over the Web was handled by our sales team over the phone. The people in the company work very hard to try and minimize the impact of the systems problems that we have. We, along with a lot of other companies, have great systems, but they're not foolproof. They do have issues at times and so we're not hiding behind the fact that we had an issue, but it's fixed.

CRN: With the purchase of PC Wholesale, Synnex is now getting into the used and refurbished computer market. Is that something that's interesting to Tech Data?

Dutkowsky: Anything that we can do to diversify our business model, whether it be with products or services or geography, is interesting to us. I tried to highlight that on our call, that the four tenets of our strategy are constantly improving our execution, diversifying our business, finding areas of innovation and positioning the company for success. We have the management team and all 8,000 people in this company focused on [those].

There isn't an opportunity for diversification that we're not either actively considering or would consider if it came to us. I'm not telling you that we're out pursuing things like the move that Synnex made. That's their strategy and their move, but I'll tell you that we're not shutting the door to any opportunities that we think can diversify us into revenue opportunities and customer segments where we can differentiate ourselves in the market.

CRN: What are you going to be doing to help differentiate yourselves from the other big distributors like Ingram Micro and Synnex?

Dutkowsky: I think the customer is the one that we have to make sure sees there is a difference when they do business with Tech Data versus when they do business with our competitors. Our outreach to our customers and the level of service and support that we give to our customers is one differentiator that we continue to stay focused on.

The second is the credit capacity that we bring to our customers. The typical VAR out there needs credit from more than just one supplier. They need credit from several suppliers if they're to grow their business. So our ability to manage and offer them credit is important and something that we do very carefully and work closely with our customers to optimize their credit capacity.

The last piece is the relationships we have with our business partners -- the vendors in the marketplace. How easy are we to do business with from their point of view? How effective are we at producing business volumes for them? I would match up our line card with anybody's in the industry and the relationships we have with the vendors that supply those products. I think those relationships are as good as anybody's in the industry. We continue to work very hard on establishing those deep relationships.

When you put all of that together ... and you put that in the hands of, in our case, 8,000 people who understand the distribution industry and are very focused on the requirements of the distribution industry, we think with all that we differentiate ourselves in the marketplace. The results we had this quarter, I think, prove that works.

But one quarter does not make a trend. You have to have several of these quarters in a row. Q3 was another strong quarter for Tech Data, so we've had two strong quarters in a row, and we believe that over the course of the next fiscal year we'll continue to progress as a company. We'll continue to make progress on the initiatives that I talked about. We'll continue to report progress on those initiatives, and that's how we're building a better, stronger Tech Data.

NEXT: Dutkowsky's hot technology picks and Vista forecast.

CRN: What do you think are going to be the hot technologies this year?

Dutkowsky: I think laptops will stay hot. I think as we were describing before, I think anything on an industry-standard server platform. I think industry-standard bladed architectures will stay hot. I think storage will stay hot across the broad spectrum, across enterprises from the largest customers to the smallest enterprises. Their demand and requirement to store more things is not going to slow down. I think the networking space will continue to grow, and we're very well-positioned in that environment to grow with networking. And I think the software space will grow, virtualization software like PolyServe that we signed up. I think Vista creates an opportunity going forward, and we're well-positioned to take advantage of Vista as it unfolds both from a hardware and a software perspective. I think those are the places where you'll see growth. I think some peripherals will grow.

Take the example of Vista. To really optimize Vista you need a larger screen. As companies roll out broad-based Vista applications, a lot of them are going to replace the displays, where in the past when they rolled out another operating system they kept the displays. Peripherals make up 40 percent of our business. We're the market-share leader of several of the peripherals suppliers in the world. As that unfolds, Tech Data is very well-positioned to take advantage of it.

CRN: When do you think Vista will hit its stride?

Dutkowsky: I think it's a second-half-of-the-year phenomenon in terms of broader deployments. If you're a CIO and you're going to install a brand new application, you'll probably do it today on Vista, but to run out and put in Vista-capable systems just for the sake of upgrading, there is probably not enough feature and function in Vista to force CIOs to do that. So Greenfield applications will move to Vista quickly, and then the transformation from XP to Vista will happen naturally over time, and I think it will pick up momentum in the second half of the year. When Vista takes off, we're positioned to take advantage of it both from a hardware and software perspective. Our customers are out there talking about big Vista rollouts with their customers. So any pace that it runs at is good for Tech Data.