Synnex CEO: Distribution Has A Big Role In the Cloud

Murai spoke Friday with Channelweb.com's Scott Campbell about Synnex's role in the cloud, Windows 7 and the IT demand for 2010. The following are excerpts from the conversation:

In your first-quarter earnings call, you talked about Windows 7 showing strong demand. Is that just coming from new systems, or do you also see strong demand on the license side, with users upgrading from XP or Vista?

The best way to describe it is any new system we sell will have Windows 7 loaded in it, particularly on the consumer systems we sell. In terms of how Windows 7 is going, it's going exactly as Microsoft would expect The anticipation is that a big refresh is going to happen, and that's on the operating system, not necessarily on the hardware around it. It do still believe the upgrade cycle will be more rapidly than in the past. IT budgets have been released a little compared to a year ago and two key areas are the data center and an upgrade and refresh of the client desktop and notebook.

You also mentioned on the analysts' call that enterprise spending has picked up, particularly with servers. What kind of servers and are more enterprise products being wrapped up with that?

With enterprise, a lot of it is on the x86-base systems. The enterprise space, in particular servers and storage, was quite muted through 2009. We saw that demand pick up toward the end of 2009 and that has continued as we started the new year. What is some being driven by? There is some server consolidation and virtualization that is driving the enterprise server space. In addition, reduced energy consumption is a key driver.

One of the key areas we're looking at expanding coverage in 2010 is in cloud computing. We have a reporter (Andrew Hickey), dedicated to that now. What ideas are you guys throwing around or have you started on? What role will distribution play in the cloud?

There's an aggregation role. When you take a look at cloud applications, we have the ability to host or facilitate end users by being able to acquire the rights to use those applications in the cloud. We also have the capability to do single sign-on and cross applications in the cloud.

You mention aggregation. It seems that as more cloud vendors look to start or enhance channel programs, they'd only be able to do it onesy-twosy, while working with a company like yours can give them access to hundreds or thousands of potential partners, depending on the application. Is that a selling point with cloud vendors?

We have a huge list of [applications] vendors that is [growing]. We have an ISV community around Red Hat in addition to an ISV community around the Microsoft platform. When a lot of people think about the cloud and things people are doing in the cloud for many years, they think of Facebook or some business applications like Salesforce.com. There are so many others that are more obscure than that. We provide a marketplace to give them much more visibility. Rather than [adding a VAR] one at a time, we can provide that access.

What were some of the highlights to your first quarter?

Market demand continues to be strong. One thing that you should look at because of an accounting change, is the difference in our earnings. On the surface we had 12 and a half percent [revenue growth], but apples to apples it was 17 percent year-on-year growth. And that was driven by the U.S. market as we said the Canadian market is soft still. Looking out, we see the continuation of the same. Especially the last two months of '09 and into 2010, IT demand has returned and we expect that to continue.