Ingram surfing a Micro-wave of success
Everything appears to be going rather well at Ingram Micro - profits are up and the firm is in a strong position in all of the key global markets. Sara Yirrell looks at the company, and at the reaction to recent publicity
Bullish broadliner Ingram Micro can afford to be a little complacent as the fruits of its global strategy become ripe for the picking.
Speaking to CRN recently, incoming chief executive Greg Spierkel, who took over the number one spot from Kent Foster on 1 June (CRN, 11 April), claims the firm is in a strong position in all three key global markets: Asia, America and Europe.
“I have unofficially been in the chief executive role for the past three months, but have been working closely with Kevin Murai (Ingram’s chief operating officer) over the last five quarters to set the tone for the direction of the company,” he said.
The direction certainly seems to be the right one. In its most recent results, Ingram posted fourth-quarter 2004 turnover figures of £7.45bn, a 10.2 per cent increase over the same period last year. Profit for the quarter stood at $79.2m compared with $46.4m for the same period last year. For the year ended 1 January 2005, turnover was $25.46bn compared with $22.61bn in 2004, with profit rising to $283.4m compared with $201.6m last year (CRN, 7 March).
“Our first aim was getting growth on our top line again. The industry has been very difficult over the last three years but last year we saw worldwide growth of 13 per cent, which was very encouraging,” Spierkel said.
He added that the company has also been making “significant investment” in Asia and has become the number one distributor in that region.
“Asia is the fastest growing IT market of the last 10 years. We now have ourselves nicely spread as a company in all geographies if one region is a little quieter than another at any time,” he claimed.
Ingram will be increasing its focus in several key areas over the coming year, including components, consumer electronics and also Point-of-Sale and radio frequency identification (RFID) technology.
“RFID is seeing a big push, and it is not just the mainstream vendors that are active in that market. We are very keen to hire talent and sign more vendors in that space,” Spierkel said.
Another key growth area is the mobile market. The distributor has recently signed deals with Orange, Vodafone and T-Mobile.
Spierkel said: “In the mobile space, Europe is leading the way for us, but it is still early days. We need to learn more and the carriers need to learn more about us. We are under-penetrated in the voice-and-data telephony SME market, but are putting alot of effort into trying to understand the needs of the market.”
Spierkel also believed the UK was still a key part of Ingram’s business.
“We are the second largest player in the UK and there is still a lot of growth opportunity there,” he said.
Ingram surfing a Micro-wave of success
Everything appears to be going rather well at Ingram Micro - profits are up and the firm is in a strong position in all of the key global markets. Sara Yirrell looks at the company, and at the reaction to recent publicity
However, it was Spierkel’s comments about the future of distribution (CRN, 27 June) that prompted an intense response from the rest of the industry. He claimed that over time, niche players would start to “feel the pressure” from a “couple of broadliners” as they add more specialisations to their portfolios.
Spierkel said: “We have started to focus on the niche players with broadline capability. Us and maybe a couple of competitors will make it increasingly difficult for smaller players to make it on their own.”
Smaller distributors fought back, claiming there would always be a place for a more specialised service.
Mukesh Gupta, managing director of security specialist e92plus, said: “Dealing with a niche player is easier in terms of service and support. From a vendor’s point of view they do like to have a broadliner on board, but what added value do they provide them? Niche players will engage in training resellers and also helping to win mindshare; companies like ourselves carry 10 or 12 products, but broadliners can carry between 100-200. Where is the value in that? I
don’t think niche will ever disappear, some may be bought out, but others will emerge in their place.”
Simon Welch, commercial director at Clarity, agreed: “If you look at Clarity, we could be described as niche because of the focus we give to our vendors. A broadliner sells what a customer wants to buy and that equals low price and low value. Niche players have a higher technical competency and level of integration with vendors, and can also support the raft of services that resellers need.
“We are also working more with system integrators and service providers rather than the broad-based interface into the SME market where the broadliners are aiming their guns.”
Welch added that broadliners eventually get into the trap of having to buy another distributor to boost market share.
“Smaller niche players have higher levels of value that will always sustain them. It is quite possible to be one tenth the size but still make the same profit as the big boys,” he said.
Andrew Saunders, divisional managing director at networking distributor Crane, said: “With continued convergence and the way product lifecycles are reducing, we think the specialisation and value of distributors like us have an increasingly important part to play and can support resellers through new technology roll-outs.”
However, Saunders commented that he understood where Spierkel was coming from.
“We are having to look at getting better return on capability and we are increasing our sales desk-based business. This means we are almost migrating to a more broadline model to compliment our traditional type of business,” he claimed.
Contacts
e92plus (0870) 200 9292
Ingram Micro (0870) 166 0422