Analysts have applauded the move by Arrow Electronics' Enterprise Computing Solutions to launch a new midmarket division and said it is a natural extension to its enterprise offering.

The new Arrow ECS Midmarket division, formally announced March 31, offers VARs more than 40 pre-configured solutions based on the needs of midmarket businesses in key technology areas and vertical markets, Mark Taylor, vice president and general manager for ECS Midmarket, told Channel Insider.

Midmarket VARs also have access to Arrow ECS's data analytics on midmarket business behavior and trends to help them better-target prospects, sales and technical training, marketing and support. 

"It's always a good move for companies to get closer to the needs of their clients and one way to do that is to have more market segmentation," said Tiffani Bova, research vice president at Gartner. Segmentation is smart from a best-practice standpoint whether the markets are broken down by verticals, customer type, customer size or product, as long as the needs of the customers are met appropriately, she said.

"More and more, distributors are coming out with a much more segmented approach to design solutions that meet the needs of their end-users and giving those solutions to their resellers," said Bova. She added that Avnet's HealthPath group is a similar example of a vertically focused group, and that both Ingram Micro and Tech Data were ramping up their efforts in the midmarket.

Click here to read more about what Arrow and its competitors are doing in the midmarket. 

"It's a good move to aim for the midmarket as the 'new frontier,'" said Christina Richmond, research manager at analyst firm IDC. "Everyone else is targeting the SMB space, why not [Arrow]?"

Taylor was quick to stress that Arrow ECS Midmarket wasn't just paying lip service or jumping on the bandwagon of the latest hot market segment, though he declined to discuss the number of personnel and the financial investment Arrow put into the new division. "This is not just a sales or marketing unit; this division has separate sales and marketing teams, a separate group of people developing supplier relationships and the group has its own finance division," Taylor said.

Much of Arrow's business was previously driven by VARs serving the enterprise segment, however, as technology becomes more mainstream and begins to move down market, many VARs find themselves selling into the midmarket space and facing new challenges.

Recession-proof your business. Register now for the 2008 Ziff Davis Enterprise Channel Summit -- Recession Resistance: Maintaining Profitability During Uncertain Economic Times.

Kevin Gilroy, Arrow ECS president, said that these VARs needed specialized technology, training and support.

"The [small business] segment is handled very well by broadline distribution and their VARs," said Gilroy, "But the midmarket has high-tech needs, but only buys once a year, and their deal sizes are smaller," he said. 

Gilroy added that while designing a customized 'one-off' solution for an enterprise customer was lucrative, the profitability just wasn't there for VARs building the same types of solutions for the midmarket. The challenge then became how to design a replicable technology solution that could be tweaked and customized for individual customer's needs.

Currently, Arrow ECS Midmarket offers solutions in the areas of security, storage and virtualization and is targeting VARs serving health care, professional services, manufacturing, retail and financial services, said Gilroy. He said that Arrow had been working to educate and train its current VAR base on the needs of midmarket customers and to give them an "on ramp" to quickly get up to speed on new market opportunities.

The distributor is also looking to recruit new midmarket VARs. "We've been out talking to VARs especially about this new midmarket group, and we've had a lot of new resellers approach us wanting to be part of this," Taylor said.

Gilroy said Arrow ECS Midmarket was currently working with numerous vendors, including IBM, to develop the solutions. He said Arrow planned to roll out more solutions areas and add more suppliers over the next few months, but did not disclose further details.