Exclusive Q&A: Ingram Micro President Paul Bay Sees Big Opportunities In Cloud, Mobility

After an exciting quarter for Ingram Micro, in which the distributor made some exciting acquisitions and beat Wall Street's expectations, Ingram Micro's North American President Paul Bay sat down for an exclusive interview with CRN's Sarah Kuranda to talk about industry trends and what's up next for the distributor in the channel. Following is a lightly edited transcript from the interview.

CRN: How is Ingram Micro approaching the cloud and building a strategy around it?

Bay: We believe that it is here to stay, and it is growing. It's more hybrid cloud than it is on-premise versus off-premise.

This is complex for our partners. You have the born-in-the-cloud solution providers and customers that understand this market, but I would say the majority of them aren't born in the cloud. They make that transition, and with that complexity, there are opportunities for us to help out with that.

There are a number of different ways that partners can go to fulfill the solution, and at the end of the day, we want to help our partners drive IT efficiency and be more agile and have reliability to their end customers.

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CRN: How are solution providers adopting the cloud? Is it a major part of their business offering or is it more of a side offering?

Bay: I think it’s an open bag. There are the born-in-the-cloud [businesses], where that's all their focused on and they're going out and getting new offerings. There are partners that I would say that are struggling with the traditional way that they've done business, and their business might not be as healthy as they would like it to be. They're trying to figure out how to make that transition [to recurring revenue].

I would say there [are] very successful companies that are doing very well selling their traditional way and are now trying to insert the cloud and/or services opportunity into future sales with new customers [and renewals]. It's really across the board.

Part of the challenge Ingram Micro and our partners have is that before they even reach out to customers, they believe they know what the answer is to the solution that they're trying to fulfill, which is a scary thing. That becomes a transactional conversation with the resellers, but that's not where they want to be.

We've got to help educate them and get them into the front end of that technology conversation, because whether they're looking at online reviews, or peer reviews, there's a plethora of information out there on the Internet. I'm talking to more and more partners who still say they're having to educate the end user who thinks they know what they need, but may not always have the right answer. We need to help them and we need to get out in front of that conversation with the end users before it becomes more of a transaction or...fulfillment opportunity.

CRN: How does the hardware aspect come into the cloud conversation? Are VARs buying the hardware or are they relying on you to provide the hardware to end users?

Bay: They are buying it from us. If they're building private, we still sell all the technology. The resellers are buying through us to stand that up for their end users.

I think the technology conversation is a more exciting one and an interesting one right now because of the complexity in the offering and how quickly this industry is moving right now. [End users] may be able to go out and buy some of the solutions that are out there, but after you start getting more than two or three solutions, you need somebody like a trusted advisor to be able to fulfill that and help them tie in the entire solution. That's a ton of opportunity.

NEXT: Google Apps vs. Office 365 and PC Sales

CRN: We've been hearing a lot of buzz around Office 365 vs. Google Apps. Do you see that dynamic changing and is it a good thing for the market?

Bay: I think it is good for the market, but the one thing I do believe is that it's an opportunity for the solution providers from a services standpoint. What Google is doing, we sell a lot of Chromebooks to the channel. They've come out with the Chromebox, which they've recently announced, which gets them into video and teleconferencing.

The opportunity really is to be able to service that. How do you bundle the products together and also be able to provide that service on a monthly basis. That's where the real opportunity is. It's not necessarily the products or the apps that they're going to be able to sell, but it’s the solution that they're going to wrap around those apps in the process.

We are seeing success with Office 365 also.

CRN: As a business, how do these apps fit in for Ingram Micro with margins not being very high?

Bay: I mean that goes back to: how do you bundle that? If you're just going to go out and sell those products as standalone, you're probably not going to have a business where you're going to make significant investments. We have to help our partners go out and differentiate [themselves] and make sure we're selling that complete solution. If they're not, then they're going to be challenged...the opportunities from a market perspective [are] not as great as it is if you put [everything] together with all the other [services] pieces.

It ties into both our cloud business and our services business because there's got to be a bundled solution and the services to be able to manage that. That's what we're doing -- how do we look at this? How can we tie in, not just solutions from a traditional distribution standpoint, but how do we [also] tie into that services aspect? That's where we know we have to go to provide our value. It's absolutely tied into the services conversation. The platform we have from a billing perspective, provisioning, that's where I get back into the complexity of all of the pieces. From an end user level, if it's just one product, you're not going to have as much opportunity.

CRN: What about PC sales? How is that side of the business playing out at Ingram Micro?

Bay: We've had a good run at the PC business. It's been a good category for us because there's still a lot of people that need desktops and notebooks that are out there. That still continues to be a very strong category. If you look at some of our large partners that are publically traded, they will still talk about how their having pretty good business from that aspect also.

CRN: Do you see that continuing to be a good business going forward?

Bay: I haven't seen anything that tells me to the contrary at this point. I mean if we're talking about this year, I think that what we're seeing and what we're hearing it still looks like it's going to be fairly similar to what we've seen here in the past few months. If that's [the only thing] you're selling, you're going to have a tough time of it, but it's still part of the overall solution that can be made up.

NEXT: Mobility and What's Up Next For Ingram Micro?

CRN: What about mobility? Is there as much growth as everyone thought there would be?

Bay: If you look at the form factors from smartphones, I think it's, on a global basis, five or six percent of the world owns tablets, and it's more like 20 percent or 25 percent that own a smartphone.

I have people on my staff who have smartphones that are almost as big as my tablet. I always laugh and say, "How do you put that thing in your pocket when you want to go out on a casual night on the town?" The smartphones have become so big. That's kind of where I believe the cross-over long term is going to be. It's going to be interesting to see that kind of smaller tablet factor versus where the smartphones are going and where that merges.

I'm on a plane every week, so I can kind of do my own survey of where [mobile devices] are. I'm seeing more people using their smartphones, even people that travel with me for day trips. Before it was [a choice between bringing] my notebook and tablet and phone, and then it was I'll just the tablet and phone. Now I'm seeing people say "I'm just going to bring my phone, I can get through it because it's got all the features and functionalities from a smartphone standpoint."

Over the next quarter, what can partners expect to see from Ingram Micro?

You will see us continue to focus on how we can continue to be their indispensable partner and building out resources to help support their business and help build a better business with their end partners. With the resources, the technical capabilities and the conversations around how we can help enable them from a full solutions [standpoint], you'll continue to see us very focused on [partners].