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CompuCom: Office Depot Deal Will Bring In-Person Technical Help To Millions Of Businesses

Alec Shirkey

Office Depot's blockbuster $1 billion purchase of CompuCom is not like anything we've seen before.

"Other office supply companies have tried this before. But they bought very small businesses, very small MSPs," Ken Jackowitz, CompuCom's chief product officer told CRN. "Where we differ is that we have 6,000 W2 technicians in North America. What's so perfect about that is you've got the ability to get the scale of those same technicians across all levels of customers – enterprise, midmarket, SMB."

What we have seen before are the fits and starts of large retailers getting into IT services, but not sticking to it. Staples bought managed service provider Thrive Networks in 2007 and electronics giant Best Buy purchased mindSHIFT in 2011. Both of those big retailers sold their respective MSPs in 2014.

[Related: 10 Things You Need To Know About Office Depot's Eye-Popping CompuCom Acquisition]

Jackowitz said that CompuCom would remain "aggressively" focused on its core enterprise business, noting that the transaction is accretive to both sides of its services offerings.

CompuCom operates 72 Solution Cafes in North America – walk-in help desks built on enterprise premises that Jackowitz likened to an Apple Genius Bar. Enterprise clients who may not take an interest in the Solutions Café offering could have a chance to leverage those same services in one of Office Depot's 1,400 retail locations, he said.

"There's clearly a service-based opportunity for our enterprise customers where their workforce could potentially go into an Office Depot and get that same kind of Solution Café experience," Jackowitz said.

Office Depot said nearly six million small and midsized businesses are located within three miles of one of its stores. Gerry Smith, CEO of the Boca Raton, Fla.-based retailer, wants to have one of CompuCom's SMB-focused Tech-Zone help desks in Office Depot.

The two companies conducted pilot tests in three of Office Depot's South Florida locations and found the managed services offering gained "very successful" traction – success Jackowitz said was a catalyst for the massive deal that would follow. Down the road, CompuCom indicated that it could expand Tech-Zone to serve its enterprise clients, too.

The past four years have challenged CompuCom. Revenues have slipped. Four different CEOs have taken the corner office in as many years. Moody's Investor Services has downgraded its credit – twice. Office Depot plans to take out a $750 million loan to refinance CompuCom's debt as part of the deal agreement.

Jackowitz said CompuCom is putting those financial issues in the rearview under CEO Dan Stone, who will remain CEO following the deal's completion.

"All the noise we've been hearing about how the market looks at us and where we are with our ratings, etc., that sort of disappears," Jackowitz said. "For us, it's a very positive signal that helps really change the story of the marketplace as far as where we are from our financial capability.

"The reality is our leadership has been consistent now with Dan Stone and his senior team. That continues to move forward. We're very confident as a wholly-owned subsidiary of Office Depot in partnering with their team to create something that's unique and different."