Avnet Considering Network Business Unit

Distributor Avnet may build or buy a network distribution business in fiscal year 2007, which begins July 1, hoping to build a $50 million to $100 million business unit, executives told Channel Insider.

The solutions distributor is incubating a group of network VARs and exploring its options to enter the field, said Fred Cuen, president of Americas for Avnet.

Resource Library:

"We see good spend there," Cuen said. "We've explored the technology trends and the vertical markets trends to see where it makes sense for us to play, and this is one of the places where we see a growth opportunity."

Avnet is attempting to build on its reputation this year for solution delivery, and the network market lends itself to the strategy—bundling together hardware, software, integration, services and delivery, Avnet executives said. The convergence of voice, data, video and network technology lend themselves to bundle solutions, Cuen said.

Building a business unit, whether acquired or grown internally, would involve enabling current partners to take advantage of the program and allow them to move into the space, if they are not already there.

Currently, only Westcon Group, which focuses solely on network technology, is the only major IT distributor penetrating the enterprise market with network solutions, according to Brian Alexander, an IT distribution analyst at Raymond James and Associates, a financial research company.

"I think this is a very complementary business to go along with servers, storage and software," Alexander said.

Avnet has a significant investment in Calence, a $300 million a year network VAR, which was formed when Calence merged with Avnet spinoff Avnet Enterprise Solutions, the distributor's network life-cycle management end-user division in November.

Jack Morris, the distributor's vice president of IBM software and xSeries, is heading the effort, Cuen said.