Channel Consolidation: Channel Chiefs Talk Partner Mergers and Acquisitions
Buying Sprees?
During the recent XChange Solution 2014 Provider, CRN held a roundtable discussion with top channel chiefs from HP, Cisco, Dell, Microsoft, IBM and VMware to discuss a variety of topics, including channel mergers and acquisitions. Here's what they had to say about consolidation in the channel.
Tami Duncan, IBM's vice president of global business partners for North America
I haven't seen an inordinately large amount of mergers and acquisitions. I would say, more than anything, that we may be buying them [laughs]. If it's born on the cloud and it's a good solution, we might acquire them. But I haven't seen that consolidation start in earnest between the partners yet, but I do think there's some of that coming.
Edison Peres, senior vice president of worldwide channels at Cisco
In our world we do see consolidation and have been seeing it for the last number of years. We're seeing the bigger guys get bigger and we're seeing a lot of the smaller guys with a bid or evaluation start to move into a rollout to be able to leverage a little bit of a bigger platform. And we're seeing a lot of services guys being bought up for partners that need to build out their services business. So we're actually seeing a lot of activity in the space.
Jesse Chavez, vice president of worldwide channel strategy and Operations at HP
We're seeing international companies coming into the U.S. now. For example, there's NTT [Dimension Data, RagingWire, Virtela Technology Services] and CanCom [HPM Networks]. So we're beginning to see a lot more of that too. I think they've been sitting on the sidelines but I think that's going to becoming a bigger trend. And what you're finding now is a lot of these acquisitions are more service oriented than they are reseller model-oriented.
Cindy Bates, vice president of Microsoft's U.S. Small and Midsize Business (SMB) division
The cloud is changing a lot of things. Our industry influx. I think we're seeing a blurring of the lines of partners. I think that opportunity to expand beyond just being a reseller and really become a consultant and a business advisor enables partners to tap into more of the full value of our staff [at Microsoft].
Frank Rauch, vice president of VMware's Americas Partner Organization
I think [M&A] is great. When Avnet says I'm going to acquire Pepperweed and Seemless, for example, or Rolta International buys AdvizeX or when Forsythe Technology acquires Syneffo Technology Solutions' [virtualization business], that's all great stuff for us. All of a sudden now you have scalability into these little companies that are now a part of something bigger.
Frank Vitagliano, vice president of North America channels at Dell
I think consolidation is going to continue. And the other reason you're seeing it is because the VAR population in some cases is sort of aging out there and they've been through these cycles before. And now that the valuations are starting to come back up again, there are a lot of folks that are looking at it saying, "You know what, it's time to get out."
Edison Peres, Cisco
There are a lot of people who are opportunistic and want to sell because their valuations are high. But this is really about growth. So you're starting to see a couple things. Globally, the world's getting flatter is definitely driving a lot more business. Another thing is that you're starting to see footprint changes, not just domestically, but across the globe. The industry is changing.
Frank Vitagliano, Dell
I think we'll start to see more big solution providers around $1 billion. If you looked at the channel, there were very few $600 million to $1 billion players out there. But now all of a sudden there's a lot more. Just look at what happened with HPM Networks recently; that's a billion dollar player now.