This year marks the 30th anniversary of Tech Data, a distributor based in Clearwater, Fla., that made a name for itself because of the PC revolution.
Tech Data CEO Steve Raymund, who took over from his father in the early eighties,
is attempting to change the company into a more specialized distributor.
Raymund has created several specialized business units that operate as boutique outfits inside Tech Data, each having its own sales and marketing team. The latest specialized business unit Raymund has created is digital products for the home and office environments.
Raymund does not believe digital products such as digital cameras, projectors, media servers, security systems, large plasma displays and HDTVs will outpace PCs or notebooks, but “”a great convergence is taking place,”” he said. “”This will be an area where resellers who specialize can differentiate themselves,”” Raymund added.
He cited Microsoft’s and Intel’s work on developing a digital home PC that can manage a family’s or company’s video, data and audio content throughout the home or office as an example.
“”It is a nice growth area,”” he said. “”The homes these days, especially in the U.S. have double in square foot size over the years. They are building 3,000 square-foot homes on average and these home owners have no problem paying US$25,000 to US$50,000 for a digital environment (not just for entertainment purposes) but to automate home security,”” Raymund added.
These digital systems are currently all proprietary-based systems and carry with them significant margins. Resellers will have an opportunity to design custom systems and install them for extra dollars, according to Raymund.
However, he added that as standards arrive and the products become more commoditized the margins will drop similar to PCs.
For those VARs who are not interested in the digital products market, Raymund sees several other areas of growth for Tech Data and the channel this year.
“”There was a severe recession in the U.S. and only this fall we began to see some traction and we started to build some momentum, which is only fairly steady. We are not returning to the go-go days of the 90s,”” he cautioned.
In fact, Tech Data’s last quarter was very positive with increased revenues in North America and in Europe. Raymund believes that homeland security to be a burgeoning market, with the U.S. government poised to spend US$379.9 billion in this area for 2004.
“”The U.S. government is a Fortune 1 account. They are the largest consumer of technology despite the Republican government (tax and spend policies),”” he added.
Government spending increases will come from state/province or municipal levels in the U.S. and in Canada, Raymund said.
“”Clearly, however homeland security is a driver with surveillance systems and so on.””
Besides security, Raymund sees growth in IP telephony, home and business automation, and supplies.
“”The situation is changing in North America. There is a realization that technology can be an important and effective way to gain in productivity,”” he said.
Another trend Raymund sees coming from the vendor community is in partner profitability.
Vendors, he said, want partners to specialize on their products and limit the amount of competition in the channel. To do this they need to raise the revenue for these partners to support them.
“”To educate and to motivate sales from the outside, vendors have to enhance the margins so that resellers are strong and are able to get the job done,”” Raymund said.