Tech Data chief questions Ingram restructuring

Steve Raymund, chairman and CEO of Tech Data Corp. of Clearwater, Fla., clearly believes the IT market is beyond recession and into a “depression”.

The distributor’s business has not increased in any area except for software and consumables. But, Raymund acknowledges those two areas are not anything to hang your hat on.

One thing he is adamant about is his support of the Canadian team, which is the fourth-best producing region for the distributor worldwide.

This, among other reasons, is why Tech Data will not follow in Ingram Micro’s footsteps and merge the U.S. and Canadian regions.

Raymund was in Canada to meet with media, partners and customers and spoke about various industry happenings including Ingram Micro recent move.

Computer Dealer News: With the recent merger of Ingram’s U.S. and Canadian regions, is this a sign that of things to come not just in distribution but in the high tech sector in general?

Steve Raymund: We do not have any plans to emulate their actions. My impressions are they would transfer their very capable Canadian president to Miami to look after their Latin American operations and have their remaining VPs report to Kevin Murai. If that’s all they’re doing; I’m very puzzled to what that will mean operationally. And, the implications of that and how the company handles its vendor and customer partners in terms of crisp decision-making, co-ordination across all different departments, and executing a company-wide strategy. We have hundreds of employees up here and over a billion dollars in revenue and I just can’t imagine us being able to provide the levels of service without someone in the CEO chair making decisions on a real time basis.

Some one being able to pull the trigger as needed. They probably have worked out all the details on how they are going to manage that 3,000 miles away, but I would not do it. But, at the same time there are areas where it makes sense to integrate regionally and globally and we have done so such as IT. We have a small contingent of employees in Canada and we have leveraged that with our Clearwater (Florida) head office. (However), the Ingram thing probably really makes sense for them. I do not understand their internal structure. All I can say is with our corporate structure it does not make sense.


CDN: Tech Data recently signed PictureTel, a provider of video conferencing products, are you developing new business development strategies and is the signing of a video conferencing provider for Tech Data part of that or does it factor into its nine business units?

SR: Yes, they would be a typical extension of the product portfolio into a space that has become digital and low cost. We have some VARs who have transitioned their business market around video telecom solutions. That is all they do and they source their products through us. That was a category five years that was not an opportunity for our VARs.


CDN: In what product areas do you see the short term and long term growth for Tech Data?

SR: We have established a group of specialized business units that require more complete set of services. For example, software licensing we have been doing that for a long time but now we have focused a lot more energy behind our efforts. That is an example of a niche market that we are getting better at and allows us to get away from packaged software and into a licensed model. Also enterprise software, wireless, handheld devices (will grow) as people find new and interesting uses and as VARs develop specialized applications their will be a lot more opportunities.

CDN: Everyone is hoping for some kind of turnaround, and people are saying it will eventually happen, when it does happen do you think PCs, in its current form, will be a large factor in that turnaround?

SR: That is a good question. Which technology will drive the growth in the future? We are betting on a more diversified, broad based approach to growth rather than putting on all of our chips on PCs. PCs will exhibit better growth characteristics in markets with less saturation. Arguably, anybody who wanted a PC in North American has already bought one by now. So the growth prospect there will be somewhat weaker than in other areas where there is much less market penetration in peripherals and accessories or in new technologies such as wireless handhelds. Things like that promise enormous opportunities if those markets take off. Fortunately, we have a very broad portfolio and I think you will see a lot of different technologies getting attractive as the market turns around. For PCs will definitely improve and I think (Windows) XP and new high end Intel processors will contribute to a bigger challenge for traditional Unix and RISC boxes. Some of the new Microsoft software allows for better management of databases for the enterprise for the first time. That is kind of new and it could bring more opportunities in high-end servers or wireless or storage that could provide a more important role.

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Jim Love, Chief Content Officer, IT World Canada

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