TD SYNNEX's Michael Urban: When IT growth is uneven, find the opportunities

The global IT market has its ups and downs, but solution providers can count on IT growth to inevitably outgrow GDP in good or bad economic times in part by focusing on a number of high-growth technologies, says Michael Urban, president of the Americas for IT distribution giant TD SYNNEX

The global IT market has lately been somewhat soft, especially after the height of the COVID-19 pandemic, but the industry is in for growth, especially in a number of key high-growth technologies.

That's the word from Michael Urban, president of the Americas for IT distribution giant TD SYNNEX, who told solution providers attending last week's TD SYNNEX Inspire conference in Greenville, South Carolina that they need to be aware of those changes and how to find opportunities for growth regardless of overall industry changes.

The global IT market is changing, Urban said, with North America, Europe, and Asia Pacific now experiencing lower growth than last year, Urban said.

The Asian market in particular is down thanks to one country, he said. "Of course, it's mainly China, because China had some issues and then stopped reporting any growth numbers anymore," he said.

However, Urban said, the decline is not equal for all vendor partners.

"The endpoint side of the business was for sure down, and is still down," he said. "But the datacentre side of the business is doing well, playing a unique role in cloud, playing a unique role in security, and playing a unique role in AI. So this is quite good news."

TD SYNNEX, working with IT analyst firm Canalys, in July surveyed TD SYNNEX solution providers who said they expect short-term endpoint business to continue to be slower than that of last year, while datacentre-related sales will be positive over last year, Urban said.

About 35 per cent said they expect 2023 growth of over 10 per cent, down from 45 per cent who expected that kind of growth a year ago, but about 42 per cent they expect growth of between 1 per cent and 10 per cent, down from 36 per cent.

"Only a small part of our partners said they expected declining business, so that's pretty good, right?" he said. "So we cannot say we are in a recession in IT or whatever. Yes, you have some challenges. Again, it's mainly driven by the endpoint business."

Historically, the IT market has seen its ups and downs with changes in gross domestic product, or GDP, said Urban. However, he said, the key point is that IT growth is almost always 4 per cent higher than that of GDP.

"In other words, if we have 1-per cent GDP growth in the U.S. next year, we will have about 5 per cent growth in our industry," he said. "That's pretty good news. There are not so many industries in a lot of markets that are having that prospect. So I will say for next year, I think the market will be slightly up, looking not too bad. And the only correction, what we will see most likely is that the datacentre business may have a bit lower growth rates compared to this year."

In TD SYNNEX's 2023 survey that included responses from 550 channel partners, respondents said they are investing heavily in key high-growth technologies, Urban said.

"AI, machine learning, data analytics, security, cloud are all up," he said. "We see that our customer partners and vendor partners investing in those areas. We've seen our partners grow their investment in AI and machine learning from up 4 per cent last year to 29 per cent in 2023."

Cybersecurity is also a big area of investment for partners, although Urban said he was surprised to see only 59 per cent of partners in the survey are selling security. However, he said, 38 per cent of partners are actively hiring in the security space.

Those numbers are significant for the channel, Urban said.

"I remember five years ago when security was a very direct play," he said. "Now it's 91 [through the channel]. So that's pretty good."

Hybrid cloud, which combines public cloud environments with datacentre infrastructures, is also a major growth area, Urban said.

It was fascinating to see how a company like TD SYNNEX can touch so many different parts of the IT industry specific to the key high-growth technologies, said David Tannenbaum, vice president of strategic vendor relationships at Micro Center, a Hilliard, Ohio-based traditional IT retailer looking to grow the B2B side of its business.

"Anybody you talk to, AI is the first thing out of their mouth," Tannenbaum told CRN. "And then machine learning falls right in line with that. And security is integral to having confidence in moving forward in this technology space."

While Micro Center is more of a retailer, it needs to be looking at these technologies not only in the consumer space, but also in the commercial side of the business, Tannenbaum said.

"Bringing technologies like those into the SMB commercial side of Micro Center presents tremendous opportunity for us as well," he said. "I'm fascinated by listening to the execs talk about the potential and what the opportunities could be moving forward and bringing that back to Micro Center. And figuring out how we can mold that into more of a retail environment."