Last updated: June 15, 2015
4 minutes read
Interviewed at the Global Technology Distributors Council Europe meeting
Forecasting the distribution business for the next few years is not easy, but if you want to get adventurous, think about the model after 2020, says Graeme Watt, president of Avnet Europe. He was interested by some of the comments from other members of the Global Technology Distributors Council panel earlier in the day talking about the evolution of the channel model. "In my view the distribution tag has got to be dropped at some point - we are an IT solutions provider, IT provider even -when you put in the technical elements and the services - to whoever wants it. The distribution-only tag no longer accurately reflects all the value we bring to bear in the market."
"We are not restricted to a vertical, a market or event a country, or a technology for that matter. We choose to play it that way." Distribution as a service was a term being discussed earlier.
He thinks Avnet itself is very well positioned to take advantage of some of the trends: take Internet of Things, where the two parts of the business, EM with components, and TS/ with the technology fit together well on solutions supply. "IoT is real and the Avnet divisions of TS and EM are increasingly working together and collaborating on this part of the market. We have several examples where we are creating our own solutions and IP, there will be much more in the future. The Avnet EM and TS parts come together beautifully in IoT - we can develop and handle solutions from sensor to server and the diode to the datacentre."
The future of distribution and the Avnet business is always under review and evolution: "We currently have eight global teams working on what our value proposition should be around emerging parts of the business we are definitely looking to globalise our approach to the market further so that we can be better at what we do and how we can message it to the market."
This doesn't mean being the same in each market, he explains, but there is a special focus on ISVs, integrators and service providers. "We're trying to move further towards a solutions and services go to market approach whilst retaining a key supplier focus - it is not easy and will not happen overnight. We have some legacy structures that are paid for and expected by suppliers and is some cases that may be difficult to change," he concludes. "But at the same time our suppliers don't want to be left behind - we are all having to adapt fast to a rapidly evolving market driven by the Cloud, IoT and digitisation."
In the discussions, several pressures were evident, even though confidence seems to have returned to the European market. "On the dollar/euro rate price rises - it would be easy to forget that some of the revenue figures going through now are buoyed by the double digit % increases that some of the manufacturers have put through. On an element of that business it is a fact that we are not making any more margin; in fact if you retain the same euro margin, your gross margin returns are diluted." There are some concerns at the effect on the market, he agrees.
"There are so many moving parts when it comes to foreign exchange movements - we're about 50% euro/ 50% non euro, and anything non-euro has strengthened against the euro contributing to a positive year over year impact" The price rises help, but demand? "Southern Europe has recovered well, but I think the currency movements have had an impact."
And while the panel had talked about a lacked of skilled people perhaps holding back growth, the management changes among vendors and channels themselves have moved up a gear: There have been a lot of changes among people with all the changes at Cisco, at Lenovo, even Avnet itself where he has just appointed a new southern Europe boss, Denis Fouquet as Regional Vice President. "It seems frenetic at the moment," he adds.