Data Center Growth Continues at Avnet Despite Economy

By Jennifer Lawinski  |  Print this article Print

Companies are still investing in the data center, despite a weak economy, and that's good news for distributor Avnet and its partners. Revenue was up 3.9% for the first quarter of the company's fiscal 2012.

Companies are still spending money on data center technology, despite a weak economy, as they look to drive greater efficiency and boost employee productivity, and that's good news for the channel, according to Phil Gallagher, Avnet Technology Solutions global president.

"Are CFOs holding back? Are CEOs holding back on enterprise spending? I think even in a market where there are some challenges around the economy, if we provide the solutions and provide the partners solutions to drive efficiency and cost savings to an end customer, they're still moving forward with that investment," Gallagher told Channel Insider. "Its not like the corporations don't have cash. Cash accessibility is not the issue with this economic downturn. If you can drive efficiency and make investments in IT, that's happening."

Sales at the Phoenix, Ariz.-based value-added distributor were up 3.9 percent to $6.43 billion for the first quarter of 2012, the company announced Oct. 27. Avnet Technology Solutions reported revenue of $2.6 billion, up 1.9 percent over the same period last year. Quarterly operating income was up 14.7 percent over last year's first quarter.

Avnet Technology Solutions saw software sales grow 40 percent, year-over-year, and hardware sales were up 30 percent, led by industry-standard servers and storage. Services revenue also grew. "The Americas continue to show very good signs of brightness from a marketplace standpoint and opportunities moving forward," Gallagher said. "We're very optimistic, cautiously optimistic, about what's happening in the market."

For VARs looking to grow their businesses, Gallagher said data center technologies across the board are in demand.

"If you look at the growth, we continue to see terrific growth in storage. Storage is continuing to grow really well for us. Enterprise servers, led by industry standard, but in the server area its still very good," he said. "As storage continues to grow and networking continues to grow, security around the network and security around the data center is going to be a big market for all of us. We're really excited about security."

VARs should also be paying attention to vertical markets like government, health care and finance, he said.

In looking for new opportunities, Gallagher said solution providers need to be ready to go with cloud solutions. "The private cloud is going to be a great opportunity for us moving forward. It's going to be a great opportunity for our partners moving forward."