Non-Traditional Channel Partners Flock To Arrow Thanks To Highly Differentiated Cloud, IoT Practices

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Managed services providers and non-traditional VARs are forging new relationships with Arrow Electronics to take advantage of the company's holistic IoT practice and hybrid cloud capabilities.

The Centennial, Colo.-based distributor said its cloud business is on track to have a $1 billion run rate in 2017. That's due, in part, to the robust onboarding of MSPs and other types of non-traditional channel partners that have recurring revenue business models, according to Sean Kerins, president of Arrow's Enterprise Computing Solutions (ECS) business.

If the projections hold, Arrow will have quintupled the size of its cloud business since May 2016, when Chairman, President and CEO Mike Long said the distributor's cloud business was operating at a $200 million annual run rate.

[Related: Arrow Snags $350M of Channel Business From Competitors, Lands Dell Enterprise Portfolio]

"We are in an unprecedented and very good position, one that we've never been in as a company before," Long told Wall Street analysts Thursday. "There are four viable, very large markets [digital, cloud, sustainable technology, and IoT] that could produce years and years of operating income for Arrow."

Arrow's computing roots are in server and storage technology, and the distributor has therefore historically worked with hardware VARs, many of which focused on the enterprise or upper midmarket. MSPs have therefore not been Arrow's traditional type of channel partner.       

"We're continuing to invest in areas that bring new customers in," Long said. "You're going to continue to see this go for quite some time, certainly through 2018."

In addition to attracting non-traditional channel partners, Kerins said Arrow has added more cloud offerings and suppliers to its line card and continues to work on completing API integrations to make the offerings more accessible to solution providers. Arrow has also worked with channel partners to create opportunities to attach cloud offerings to products that are already being sold on premises, Kerins said.

Arrow has benefitted from developing its cloud market and ArrowSphere enablement tool internally, Long said, as this has facilitated the seamless integration of cloud solutions into its selling motion. The market has also increasingly validated Arrow's approach to the cloud, which Long said fuses together on-premise, data center, private and public cloud into a hybrid infrastructure and architecture.

From an Internet of Things perspective, Long said Arrow had been the one-stop shop industry players looking to buy components, access supply chain and manufacturing services, procure compute, storage and cognitive tools, and have sustainable options when their products reach the end of life.

Arrow invested in IoT several years ago, Long said, and now has engineering centers operating around-the-clock all over the world to answer any design-related questions that an engineer might have.

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