Opportunities for niche players

The Australian IT channel continues to excite and surprise me, primarily because of the resilience that it has to current macro economic conditions. Business partner organisations, and distributors in particular, are taking advantage of current market conditions to establish, or in some cases re-establish, their customer value propositions. The Australian mid market defies the odds and currently shows growth of around 5% CAGR. In short, these are indeed interesting times to be working in the Australian IT channel.

A phenomenon that continues to be prevalent is that of consolidation, and not just in the vendor community (i.e., the recent announcement of HP and EDS). Over the last five years, we have seen consolidation occurring in the channel; business partner organisations are merging and distributors are looking for strategic acquisitions that will extend their presences either geographically or from a product perspective.

For example, the coming together of two of the power houses in volume distribution when Ingram Micro acquired Tech Pacific, or more recently, and closer to home for us at Avnet, was our recent acquisition of ChannelWorx to increase our presence into the networking and security market. Will this trend continue?

Quite simply, it is a sign of the times, and if pressed for an answer I would say that it is somewhat inevitable. Larger global distribution organisations will continue to look for acquisition opportunities in the market to take advantage of emerging technologies so that they can stay ahead of the curve, and so they can adequately service the needs of their business partner customers, who are in the marketplace driving these new technologies and IT solutions. In parallel to that, there also remains an opportunity for niche distribution organisations to create a play for market segments that may not necessarily be covered by the larger players.

In today’s complex and dynamic business environment, delivering the ideal combination of technology products and services to meet customer business needs is more challenging than ever. Sometimes the correct answer to solve a business problem comes from a packaged product. Sometimes it requires a solution that marries multiple products with services together. Increasingly, developing and delivering the right solution – for an individual customer or for an entire market segment – requires the entire channel to work together collaboratively.

By combining knowledge of the customer’s needs with technology available from a multitude of suppliers, good distribution firms will make it easier for business partners to create and deliver solutions that solve customers business problems. The end result is overall growth for business partners, accelerated time to market, expanded capabilities and a competitive edge in
the marketplace.

Drilling down further, there are certain solution segments that are driving and fuelling growth in the current Australian market. One such segment is the storage and virtualisation arena. In nearly every business today there is a growing need to save energy, floor space and reduce the complexity and expense of managing IT infrastructures. End user customers are looking to business partners for help in realizing the maximum value from their technology investments, as well as reducing the cost and complexity of adding new IT services. The quest for leaner IT infrastructures has led to explosive growth in virtualisation and consolidation solutions.

At Avnet, our newly created Storage and Virtualisation Solutions practice helps business partners bring complete virtualisation and consolidation solutions to market quickly and cost effectively.

data centre for niche opportunities players