XChange Latin America: Distributors Talk Up The Value Of Partnerships

When it comes to growth, Latin America remains one hot market.

That was the assessment from three leading distribution executives who assembled at the XChange Latin America conference last week in Dallas for a panel discussion led by Global Technology Distribution Council CEO Tim Curran.

The executives said some Latin America markets, such as Brazil, could grow as fast as 20 percent in the coming year with the overall market charting growth of at least 10 percent. The distribution executives representing Ingram Micro, Tech Data and Westcon said they are expecting robust growth across almost every product category, especially tablets, notebooks, data center products and cloud computing.

[Related: CRN's Exclusive Coverage Of XChange 2012 ]

"We are halfway through our fiscal year and the demand is very strong," said Luis Olivera, vice president and general manager for Latin America and the Caribbean at Tech Data.

"We have seen a huge demand in the market for tablets, smartphones and handhelds. We have even noticed a high demand for laptops and desktops in Latin America, so we foresee a possible rebuild in that segment. We have divided up our business for efficiency with things like cloud and data centers so we can ensure a right focus for the right types of resellers," Olivera said.

Ingram Micro's Ignacio Rojas, managing director of Miami Export and Peru, who sat on the panel, agreed with Olivera's remarks, adding that Mexico is one of Ingram Micro's best-performing markets inside Latin America. He cited collaboration software and videoconferencing as promising segments.

The distribution executives said the market's growth is being fueled by several factors including a fundamental shift in the population out of poverty and into middle class status, which is driving more consumer purchases and fueling SMBs. In addition, distributors said that there is a strong demand for smartphones across the business and consumer markets along with vertical market demand in agriculture and oil and gas. Government and public sector spending also remains strong.

However, the Latin American market is not without its risks, the executives agreed. Political unrest, currency devaluation and slowing exports to Europe could all impact the market's growth.

While the solution providers in the audience agreed that the Latin American market is growing far faster than North America or Europe, many said they are struggling with a transition from product reselling to more services-oriented business models.

"There is a hurricane bearing down on the technology space -- the cloud, social media and tablet hurricane -- and it must be embraced," said Curran. He told the audience that distributors could help them in transitioning their business models and identifying new vendor partners that address cloud and mobility.

"The industry has underestimated the capabilities of the distributors during periods of transition," Curran said.

"We help the partner make the best out of solution providers' resources. We have the scale and the ability to have different people bring their different solutions and go directly to the source," said Rojas.

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Although these distributors are bringing such opportunities to the table, when asked for a show of hands how many Latin American solution providers are currently partnering with distributors, only a handful said that they do. There was a general consensus that XChange Latin America attendees aren't utilizing this relationship opportunity as much as they should.

"Distributors are needed because that's the best way for manufacturers to collect their fees without dealing with each one of the different channels, but for us partners, and for me specifically, I haven't found one yet that would really help me, add value to my chain and be a necessary investment,’ said Jorge Lopez, director general at Interfase, based in Mexico.

"We know that everyone has been cautious about investment so we understand the hesitancy of the solution providers, but we also see growth. Latin American countries are showing progression, especially in the IT industry. If we didn't have as much caution as we currently do, we would probably grow much faster," said Helio Guimares, managing director for Central America, the Caribbean and Spanish-speaking South America for Westcon CALA.

One of the only XChange Latin America attendees who said that he is currently partnering with a distributor was Carlos Eduardo Garcia with InterWeb, based in Brazil. "I work with one of the main distributors in Latin America because they manage our risk. The logistics within Latin American IT are very different than they are in the U.S. and other countries in Europe, and distributors have the knowledge and resources to reduce those risks," he said.

Overall, the Latin American economy looks good for the foreseeable future, which means success in the IT and technology space.

"My biggest piece of advice to these solution providers would be to pick a partner and dance closely," said Curran.

PUBLISHED AUG. 30, 2012