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CDW CEO: I'm A Fan Of The 'Hybrid Answer'

Server sales were up almost 20 percent last quarter, CEO Thomas Richards said on CDW's second-quarter earnings call, proving that the hybrid model of on-premises and cloud is still going strong.

CDW CEO Thomas Richards told investors that server sales were up almost 20 percent last quarter, proving that the hybrid model of on-premises and cloud remains viable for customers.

"After a lumpy 2017, servers delivered its second consecutive quarter of double-digit growth, up nearly 20 percent," Richards said during the company’s second-quarter earnings call Thursday.

U.S. hardware sales were also up 6 percent, while sales of monitors and digital signage were strong, he said. Video delivered a double-digit growth quarter, powered by digital signage and large-monitor formats, Richards said. Interactive flat-panel growth was robust as price points in this category are becoming more competitive to static displays, Richards said.

CDW reported revenue of $4.18 billion for its second quarter ended June 30, up 7.6 percent from the same period in 2017. The company reported net income of $173 million, up 22.8 percent from the year-ago quarter.

’I continue to be a fan of the hybrid answer because I think customers want to continue to move workloads around,’ Richards told investors. ’I think one of the things that we’re seeing even more so now is the requirement for flexibility. Realizing that in any given period, you may move workloads around.’

Over the past quarter, CDW customers spent roughly $3 billion on solutions delivered via the cloud, the company said. Overall spending on cloud products was up 40 percent among CDW partners, with security solutions, growing workload, and backup responsible for most of the spend. He said the company has been working on its cloud business since 2011 and it has paid ’huge dividends for us,’ thanks to state and local governments recently sending work into the cloud.

In June the company lost the leader of its cloud division when Shane Zide departed.

’We're seeing more and more government cloud adoption as IT organizations set out to drive greater focus on accountability as well as enhance cybersecurity and shared services outcomes,’ Richards said. ’Agencies aren't just integrating cloud into their IT strategies. They are integrating cloud into their overall strategies as a way of driving change.’

Meanwhile, Richards said in the second quarter, CDW added Amazon Web Services to its portfolio, which eventually will give CDW customers a choice between that and Microsoft Azure. The AWS offering is targeted at two customer end markets and will be rolled out as part of CDW-delivered professional and managed services, which help customers with the migration and integration of cloud products.

Richards said the slow debut of AWS to CDW partners is by design and the company does not expect it to have an impact on sales in 2018.

’Let's make sure we get it right, then we’ll roll it out to the broader group,’ he said. ’Belive me, I’ve got lots of salespeople in other parts of the organization who are saying,'Why not us?' but our goal would be over the next quarter or two is just to ensure we get the right kind of rollout. And then probably more broadly in 2019.’

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