Logicalis Buy Signals More Consolidation

The move by Logicalis, a Slough, U.K.-based company with U.S. headquarters in Bloomfield Hills, Mich., could indicate more channel consolidation is on the way, notably among IBM Business Partners.

"We see a lot of consolidation coming and we wanted to get a head start," said Logicalis U.S. CEO Mike Cox. "This gives us a big seat at the [IBM] table."

Among the more notable recent IBM partner acquisitions, Sirius Computer Solutions, San Antonio, one of IBM's largest North American partners, acquired IBM zSeries solution provider Denver Solutions Group (DSG) in June. "More consolidation is going to happen; we're not through [with acquisitions] either," said Harvey Najim, Sirius president and CEO.

Najim said many regional IBM solution providers tend to focus on a single server platform such as iSeries and aren't well-equipped to compete without growing through acquisitions.

Cox said Logicalis needed the geographic reach, technical certifications and the IBM value-add authorizations from Indianapolis-based STI to establish itself as a major national IBM player.

Logicalis, which has annual revenue of almost $300 million, did about $10 million in IBM business last year, Cox said.

"The reason we couldn't grow that business quicker is ... IBM has a strict set of compliance and value-added rules that discourage multiple Business Partners from going after the same accounts," Cox said.

Logicalis is also trying to increase its HP business through a pending acquisition of a regional HP-only solution provider. Cox declined to identify the solution provider because the deal won't be finalized for several weeks. "We want to leave no doubt that we are HP's largest enterprise server and storage solution provider and that we have a clear commitment to HP," he said.