Avnet's CEO Weighs In On Mobility, Services And The Sale Of The End-User Business

Avnet announced Monday that Rick Hamada will succeed Roy Vallee as CEO when Vallee steps down on July 4, the beginning of Avnet's fiscal year (Vallee will remain on as executive chairman). CRN's Scott Campbell spoke to Hamada to find out where the distributor's focus will be under Hamada and where he thinks solution providers should be investing. The following are excerpts from the conversation:

First of all congratulations, Rick. Your promotion was part of a planned succession program by Avnet. Why should it be important to your VAR customers that you will be taking over the reins come July?

In my 27 years at Avnet, the first 22 were obviously very directly involved on the computer side [with Avnet Technology Solutions]. The last five [years], I've expanded my horizons on a horizontal basis. Not just in computers and components, but our IT systems, logistics, operational excellence, employee engagement. I hope that's helped our company.

What new directions do you see for Avnet going forward and how is the company preparing itself for the future?

It would be premature for me to lay out a new, grand future vision. I've been helping in part to shape Avnet's future for quite a while. Heading into the new fiscal year, I expect we'll try to find the right balance with a lot of existing strategies and we'll be responsible in shaping, forming and executing those strategies. It's not a flip of a switch to new strategies. Avnet has only survived this long by being adaptable, agile and responding to opportunities. There will be changes and curves in the road and we will have some surprises. I really believe we'll be ready.

What advice do you have for today's enterprise VAR on how to prepare for the future? What technologies do you think are being underserved in the midmarket and enterprise? What services should VARs be focusing on?

Jeff [Bawol, president of Avnet Technology Solutions, Americas.] and Phil [Gallagher, global president of Avnet Technology Solutions] would be greater quotes than me on that. But as I do start to look at the business and have conversations with VARs, which I still welcome and value, the focus is on solutions. Go deep in chosen practices, industries, verticals to offer deep value. That makes a lot of sense to me. You can't choose to be everything to everybody. Do what makes sense from a geographic basis, your [employee] expertise and where is the growth for IT in the future. Virtualization seems to be strong and security is still a rising need. Will IT spending continue to grow? Given the fact that some additional investment seems to be coming from the government, I'd look at that landscape. You can't do it all, but you can do what makes sense for your company to come up with the right combination, the best features, benefits and budgets, into the most effective solution.

Is Avnet looking to get more into services, to strike more of a balance between products and services?

I certainly think it does make sense to focus there. The growth of software and services in context of a solutions focus makes a lot of sense for us.

What sorts of software or applications areas might you look to add?

I'm not sure any come to the top of my head, but obviously a lot of our focus with software has been to offer as complete a platform as possible, not only with database tool sets, but platforms and really getting to the application layer.

Next: Avnet's Mobility Strategy

One hot area is mobility. One of your competitors has talked about a mobility focus and maybe even getting down to the user device level, where they historically haven't played. How important is mobility to you and would Avnet consider getting down to the end device layer?

Mobility is a strong area for us. It is very clear that more and more enterprise applications are becoming mobility enabled. We have to make sure we have the proper platform, tools, the right access at the right time, the right security to allow those mobile sales force or service organizations to access that information. These are all things that are very strong trends as more information needs to get further faster.

Avnet recently sold off the solution provider business it acquired in the Bell Microproducts deal. Meanwhile, Arrow Electronics bought a VAR 500 company, Shared Technologies. That's the opposite of a few years ago when you guys owned your own end user business. Why the switch on both parts?

I'm dangerous enough when I speak for Avnet so I wouldn't presume to speak for Arrow. From an Avnet perspective, our overriding strategy was we do not intend to compete with customers. There's a potential conflict if you sell to end users.

If Arrow says their Shared Technologies business complements what its VARs offer, can you envision doing the same, offering services that theoretically don't compete with your VARs?

From that perspective, complementary services would be a keen strategic interest to us. But wherever you bring in the aspect of selling to end users, my first reaction is that it will be competitive. That potential conflict is something we would not look to do. But we do believe in complementary services opportunities that we could scale and offer to partners.

Finally, 2010 was a big year for mergers and acquisitions in the IT industry. Do you see Avnet looking to participate in that at a significant level in 2011?

It was a good year in technology across 2010. At Avnet we are still interested in profitable growth strategies and value creation.