More Consolidation Ahead as Avnet Buys Integrator
In yet another indication that channel businesses are in play, distributor Avnet has agreed to buy systems integrator Ontrack Solutions of Mumbai, India. With this deal Avnet is trying to expand its footprint into India's fast-growing IT market (where it already is active.)
This is a real indication that distributors are looking to hedge their bets in the slow-growth U.S. market by expanding overseas. (Tech Data recently noted that projected growth in the second quarter would be fueled by sales expansion in Europe.) Ontrak Solutions has partnerships with key vendors such as Hewlett-Packard, IBM, Citrix, VMWare, Nokia, CheckPoint, Websense, RSA and DoubleTake.
During the last few months, channel merger and acquisition activity has been esclating. HP is buying EDS, Forsythe Solutions Group acquired More Group, and now Avnet is buying an integrator in India. Expect other large distributors to contemplate similar strategic moves during the remainder of this year. However, the distributors need to proceed cautiously as international expansion hurt some of them during the last economic downturn when Europe was slow to recover. Still, with so many integrators in play, now on a worldwide scale, more channel concolidation appears imminent.