Arrow Execs: Having Both Computing And Components Expertise Is Vital to Success in IoT

Arrow executives said they are now the only distributor capable of creating and managing the data around a smart device, thanks to rival Avnet's decision to sell its Technology Solutions business to Tech Data.

"To try and do that [all of IoT] as two separate companies is virtually impossible to do," Chris Stansbury, Arrow Electronics' chief financial officer, said at the Raymond James Technology Investors Conference on Tuesday. "We're now the only player who can do that."

Once Tech Data's $2.6 billion acquisition of Avnet TS closes in the first half of 2017, the combined company will continue partnering with Avnet's legacy Electronics Marketing (EM) business to leverage EM's Internet of Things capabilities. Avnet also has IoT capabilities in its TS business, while Tech Data formally launched an IoT program in July.

[RELATED: Insight CEO: Watch For Competitor CDW To Buy Companies In Europe]

Sponsored post

Creating an IoT practice that addresses both the design of intelligent devices as well as the communication, storage and security needs of those devices and the data they create can be a challenge, said Sean Kerins, president of Centennial, Colo.-based Arrow's Enterprise Computing Solutions (ECS) business. "It's a lot easier when all the IoT resources you need across that whole spectrum are available all inside the same company," Kerins said at the conference at the Westin New York Grand Central.

Kerins said Arrow has a cross-section of talent across both its ECS and electronic components divisions focused on and dedicated to the IoT opportunity. This IoT foundry has people dedicated to business development, Kerins said, including solution architects focused on what customers are looking for from a total IoT solution rather than specific chips or sensors.

Arrow has also put referral mechanisms in place to incentivize cross-selling behavior between its components and ECS divisions. Kerins said the distributor had seen significant interest from its channel partner community around getting into industrial or operational IT, which is all about the Internet of Things.

"We've very excited about where all of these transactions ultimately positions Arrow," Stansbury said. "We're firmly of the belief that the Internet of Things has a huge growth potential long-term."

Additionally, Arrow is not concerned about Tech Data now having both a broad line and specialty IT distribution practice under one roof. Kerins said that's because a broad line distribution approach doesn't generate market share gains for value or enterprise-focused suppliers.

"There's a fine line you walk when you compete on price and inventory availability versus competing on value," Kerins said. "Over time, suppliers and channel partners vote with their loyalty, and they vote with their pocketbooks."

Kerins said Arrow's recent financial results have demonstrated that quality returns can be achieved with an exclusively value-based selling motion and a reliance on specialization where it makes sense.

"As one of the only pure-play, value-based distributors on a multinational basis, I think all of the suppliers and channel partners have recognized they need that kind of enablement," Kerins said. "And that represents potential for us long-term."

Arrow is focusing on products and technologies that typically require a longer sales cycle, custom configuration and pricing, intense negotiation and multiple selling partners. Kerins said Arrow tends to shy area from sales that are primarily about inventory availability and price such as PCs, printers, smartphones and workstations.

"We have stayed and will continue to stay in the more complex end of the IT spectrum," Kerins said. "That's where we think the returns are best."