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Tech Data CEO: Closing The Avnet TS Deal Has Created One Of The Premier Routes To Market For IoT
Tech Data CEO Bob Dutkowsky fired back at Arrow Electronics, saying the company doesn't need its own semiconductor operation to have a robust Internet of Things practice.
"The idea that you have to be end-to-end in that little [IoT] space doesn't make any sense to me," Dutkowsky told CRN after closing the $2.6 billion acquisition of Avnet Technology Solutions. "If we need to find a particular partner who has competence in components, for example, we'll find that partner."
Since Tech Data announced plans to acquire Avnet's $9.65 TS division, executives as Arrow – Avnet's primary competitor – have said they now have an edge around IoT since they'll be the only distributor capable of both creating and managing the data around a smart device. And earlier this month, Arrow said they have agreements in place to snag $350 million in annual business from other IT distributors.
Dutkowsky pushed back against the notion that large swathes of Avnet TS partners unsure about their future under Tech Data switched to Arrow. Resellers and vendors are constantly altering their routes to market, said Dutkowsky, highlighting a $300 million bid Tech Data won from a vendor just a couple of quarters ago.
"You have to talk about all of the wins and all of the opportunities that have moved to different routes to market," Dutkowsky said. "$350 million [of new business wins] would be a small number for Tech Data relative to the amount of business that moves back and forth."
Avnet TS partners said they've been contacted by as many as a dozen different Arrow reps trying to get them to switch their business. The push from other distributors was fast and furious in the weeks after the deal was announced, partners said, with competitors reaching out via email, voice mail and LinkedIn.
But Dutkowsky said Tech Data and Avnet excelled at reassuring wavering solution providers in the weeks following the deal announcement. The distributors quickly notified partners that existing contracts and lines of credit with both companies would remain in place, Dutkowsky said, and detailed Tech Data's vision of being a dominant global player in both the broadline and specialty distribution spaces.
Most of the feedback Dutkowsky has received from solution providers has focused on their appreciation for no longer having to seek out separate distributors for value and volume offerings, especially given the obligations surrounding multiple contracts and lines of credit.
"It becomes that the reseller spends more time managing their distributors than they do serving their customers," Dutkowsky said. "With Tech Data and our one-stop, end-to-end capability, we have become the distributor of choice."
As for the Internet of Things, Dutkowsky said Tech Data and Avnet TS would leverage partnerships just like the companies do in virtually every other computing environment. One of those partnerships will be with Avnet's legacy Electronics Marketing (EM) business, which has robust Internet of Things capabilities.
"Virtually every other computing environment works because partnerships and solution developing and solution building happens cross-vendor, cross-distributor, cross-platform and cross-architecture," Dutkowsky said. "And IoT is just another manifestation of IT."
Avnet also had IoT capabilities in its TS business, while Tech Data formally launched its IoT program in July. Going forward, Dutkowsky pledged that Tech Data and Avnet TS will continue to partner with leaders in the IoT space, creating one of the premier routes to market.
Now that Tech Data and Avnet TS are no longer competing against one another, the two sides will begin vendor and customer-focused integration work. The company said it would integrate Tech Data's Americas data center business (known as Advanced Infrastructure Solutions, or AIS) into Avnet TS's operations to minimize disruption and ensure a smooth transition for customers and vendors.