Insight EMEA boss eyes European hardware acquisitions

Stuart Fenton opens up on strategy, performance, rivals and partners in candid interview

Taking place at London's Old Billingsgate Market today is the annual Insight Tech Show, where the reseller gives delegates from more than 1,500 of its clients the chance to meet with a wide range of its vendor partners. CRN went along to the event to catch up with Insight's EMEA chief executive Stuart Fenton (pictured) and hear about his growth ambitions across Europe.

CRN: Can you tell us about your European expansion plans - will you be pursuing more acquisitions?
Stuart Fenton: We have always been very cautious with acquisitions. We have bought not just for scale, but often for skill. We are keen to expand our footprint in Europe - I think Germany, the Netherlands, Spain, France and Italy are the key countries. In most of those our business is focused on software licensing, after our acquisition of Software Spectrum in 2006.
We expect to do more acquisitions in France, Germany and the Netherlands, probably in that order, to get scale and skill, predominantly in hardware and hardware-related services. Our focus is on infrastructure, rather than just shifting boxes: Cisco, HP and Dell datacentre technology, and mobility are areas where we will be expanding our footprint in the next 18 months.

There have been some high-profile opportunities in the UK of late, in the shape of 2e2 and Equanet. Did you look at these, and what is the acquisition outlook for Insight in the UK?
There has been this concept of doing roll-ups, often funded by debt or private equity. If we do an acquisition, we are likely to do it via our own resources. We want to be sensible and cautious. In the end, maybe 2e2 went one acquisition too far.

With 2e2 having disappeared, Logicalis and Kelway having closed acquisitions and others such as Softcat and SCC continuing to grow, is the top end of the market consolidating into five or maybe 10 big players? Is there room for another £100m or £200m reseller to emerge?
I am almost certain the market is large enough for additional players. If you look at the large players, they are all very different. They are similarly sized, but underneath the covers they are all extremely different in terms of where their success comes from.

Insight's results in EMEA last year showed some solid top-line growth, but seemingly at the expense of margins. What can the decline in profitability be attributed to, and is it of concern?
One thing was the impact of the partner programme changes. Secondly, we are transforming our business. In terms of growth, we feel comfortable that we grew immensely in cloud and our services business had really good organic growth. To get that growth, you need to make big investments. Did we get the balance right in terms of investments versus profitability? Perhaps we could have done a little better. But I am incredibly happy with the number of clients we have and in where the business is growing - in mobility, storage and services, which are the critical product categories where we have seen growth.

Which are the key growth areas for this year and next?
Storage in particular, and mobility, which is an enormous opportunity. But the challenge is whether the increase in new devices is at the expense of the older form factors. Most of the data would indicate that that will be the case. Tablet computing will increase dramatically and we have to look at the whole culture of mobility. Cloud will continue to grow, albeit slightly behind the hype. We certainly see storage as an enormous growth area.
One of the areas that has not gained much traction but which we think will grow greatly is high-density, low-power server environments. We expect Dell and HP to be leading-edge vendors as hybrid environments become very interesting.

There is now a host of tablet products; which are the key offerings for the enterprise market - what do you make of the Surface and ElitePad?
I think the Surface is a brilliantly designed product, particularly when you look at the kickstand and the touch cover. From an enterprise perspective, you need the industrial-strength support that you would get from a big OEM, like you do with the ElitePad. It has a range of innovations, such as the jackets. It can be customised for vertical market solutions, and we see it as a fantastic product for the NHS and we can see it going into manufacturing and other complex environments. HP's strength in customer support is key. But we expect to see similar types of innovation from Lenovo and Toshiba.

Looking at your key vendor partners, are you happy with the progress HP is making in its turnaround plan?
I think HP is more in touch with its clients and resellers than ever before in their history. This gives me great confidence, as you cannot be successful unless you are close to your partners and your clients. They are not working in a vacuum; the leadership is incredibly impressive and their investment in R&D is very convincing.

Do you see Samsung becoming a bigger player in the enterprise IT space?
Samsung is not as close to their clients and partners. But the approach that Samsung has is not dissimilar to that of Apple in that their focus is on creating great products and that is a very good strategy. If they continue on that path, I see them taking share in the enterprise space.

What of Microsoft - there have been a lot of changes to the channel programme in the past year or two, and some big new products such as the Surface and Windows 8. Are you happy with the direction in which Microsoft is going?
Microsoft is one of the most successful companies in the history of our industry. I think the negative comments about Windows 8 are somewhat naïve. We have seen a lot of interest in Windows 8 but I think the devices are not yet in the marketplace for it to really explode. We have not seen a game-changer such as this since Windows 95, which was massively popular. Windows 8 is a risk on Microsoft's part, but I am optimistic about its future.