Distribution Central acquired: ROLLING BLOG - Industry reaction to Arrow’s DC acquisition

Distribution Central acquired: ROLLING BLOG - Industry reaction to Arrow’s DC acquisition

All the reactions from across the channel

They were just a little younger then: Nick Verykios and Scott Frew re-enter the IT channel with the acquisition of Firewall Systems

They were just a little younger then: Nick Verykios and Scott Frew re-enter the IT channel with the acquisition of Firewall Systems

ARN is getting reaction throughout the day so stay tuned for all on the latest opinions on Arrow's acquisition of Distribution Central.

Channel Dynamics director, Moheb Moses, said when DC established there was not any doubt that their intention was to build the business and sell it on.

“It’s what Nick and Scott have done very successfully in the past,” he explained.

“What Arrow get now is a great leadership team and products that are aligned with its portfolio especially since the acquisition of Observatory Crest.

“There is great alignment between the technology. The only surprise is who it is, not that it happened.”

Exclusive Networks Asia-Pacific managing director, Dominic Whitehand, said it was fairly obvious that Arrow would be the best suited for Distribution Central when came into play.

"They also had time to build the business to a level where it's going to be a right time for them to sell. The time's right for them, they did a good job with the team, so it works well and there's plenty of room for everyone as usual in the distributor space," he said.

Whitehand said the deal will not affect Exclusive Networks' security pure play.

"We've been competing with Distribution Central and Arrow for a long time. They have a couple of vendors that we don't but it's the same vice-versa. When Scott and Nick built DC, it was a security-focused company but it is not anymore," he told ARN.

Whitehand also said that the number of local distributors being consolidated into global ones will decrease.

"When you look at the businesses that are attractive to global distributors, there are not too many left of the size that they will be particularly interested in. There might be some left-field acquisitions later on in the year but not necessarily in distribution."

Synnex A/NZ CEO, Kee Ong, said consolidation is bound to take place in the market and to a certain degree, it will create more competition.

"The channel is more dynamic and hopefully these types of acquisitions will provide more resources for partners. Particularly when you're looking at the value-add and the types of products they offer, it's more suited to the enterprise channel partner rather than SMB," Ong said.

NEXTGEN managing director, John Walters, congratulated both Verykios and Frew on the sale and said that multinational organisations were on the lookout to expand their footprint into Asia.

"Australia is a good stepping stone into Asia. Looking at the time when Ingram Micro bought Tech Pacific, they only had a small Singapore presence and they saw Tech Pacific as having a scalable, well-managed and profitable business," Walters said. "I wouldn't be surprised if Arrow want to get a good stepping stone into Asia via the mature market of Australia, and well-run businesses like Observatory Crest and Distribution Central."

Walters said NEXTGEN will continue to focus on providing value-add services and concentrate on its vendor and partner relationships .

"Competition is definitely good and gives us more drive to be innovative," Walters said."Vendors will always make their mind up as to what they want to do from a distribution and partner strategy, and they'll do what they believe is best for them. It's up to distribution to align as closely as possible to our vendors, and we've also got to be close to our partners and system integrators, to make sure we're giving them the right service levels.

"If we continue to do our job, be focused and provide value-add services and come up with good initiatives around that, there's always a role to play."

Dicker Data chairman and CEO, David Dicker, told ARN the increase in global distributor entrants is not going to lead to the birth of more local distributors.

"It's a shame to see another Australian company swallowed up by a foreign multinational, but it was inevitable, as they'd always built it for sale," he added.

Telsyte senior analyst, Rodney Gedda, said the move was fantastic for DC considering the company’s growth in the last ten years.

“It is evidence that multinational corporations are keeping an eye on developments in our market and are attracted to local organisations that are growing fast,” he added.

“It is a good sign for other local players looking for an acquisition that there are opportunities out there.”

Gedda said that the acquisition would not concern other distributors in the short term due to established relationships, but we would likely see more niche players entering the market.

“You have a whole value chain of Cloud that resellers can tap into, everything from on premises systems to Cloud infrastructure so it is definitely a good time for niche players to enter the market and disrupt the established players.

CCNA is one of Distribution Central’s current partners and operations director, Craig Sims, said the acquisition could be a good thing for the reseller long term due to Arrow’s global reach and vendor portfolio.

“There are a lot of opportunities that we get working with partners over in the US including Arrow partners and that could help us in the Australian market by bringing some of those solutions across here,” he added.

“As long as the distributors maintain their level of service and there is enough in the market that we don’t see price hikes, I think it’s a good thing.”

Insentra managing director, Ronnie Altit, said the market opportunities in Australia have gathered enough momentum to attract interest from global organisations.

"It's interesting to see another Fortune 500 company make a good foot print in Australia. Now with DC having an international owner, presents a whole new world of opportunity for them," Altit said.

"At a local level it will make the market more interesting for other players such as Ingram, Westcon and Avnet and others.

"This isn't the first time that the duo (Verykios and Frew) have built a successful business."

HubOne CEO and founder, Nick Beaugeard, said DC being acquired by Arrow is good news for the industry.

“Once again, those two wonderful gentlemen have showed just how they are at building successful businesses. This acquisition is good news for the industry.

“But it’s also a sign that there are some changes happening in and around the channel around consolidations and acquisitions. In the long term, this is going to be fascinating. Overseas distribution reach into Australia is becoming more important for the channel because more global customers are reaching out to us,” he said.

Beaugeard added that anytime a bigger business comes along with more resources and products, it helps the industry grow.

“That helps – there’s more buffer there to stand on in terms of channel support, education, programs, and all the things that make distribution useful. The better funded they are , the bigger they are, the better it is for the channel.”

Nexon director, Barry Assaf, has a strong relationship with Distribution Central and has also worked with Observatory Quest prior to the acquisition by Arrow.

“From our point of view, it is encouraging given the business is looking to expand ,” he said.

“I would imagine the whole product set would be diverse and I am personally looking forward to leveraging all the offerings from the broader portfolio.

“I think it’s [the sale] the right thing to do in the market at the moment as well. As long as the distributors are able to maintain the personal relationships, funding and support, we should see them do well.

“When you have an international player like Arrow get involved, you generally get better support across different areas, particularly in funding growth initiatives.

“The DC staff are very dynamic, progressive and aggressive so the extra support can only be a good thing for the whole industry,” he concluded.

Katana1 co-founder and managing director, Nick Russell, said the company has been working closely with Distribution Central for a number of years.

"It's great for DC and the team because Arrow is a big player around the world. It is a distributor for some of our key vendors, such as NetApp and Splunk. And our distributors often bring up new technologies from the US so if our customers benefit from them, we can bring them in through DC," he said.

Cloud Plus CEO, Jules Rumsey, said there's a lot of consolidation happening in the market in the last few years and these changes could make some players in the channel nervous.

"Between Whitegold getting snapped up by Exclusive Networks, Ingram Micro being picked up recently, Dicker Data buying over Express Data, and now this, there's a lot of change happening. This might cause some people to be nervous but it's difficult for these guys to compete unless there's some level of consolidation.

"It's going to be interesting to see how that dynamic changes with the acquisitions," he concluded.

ARN reached out to local Arrow executives but none were able to comment at this time.

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