Ingram Micro, AMD Enter Global Partnership

Wherever in the world distributor Ingram Micro Inc. does business, so can processor maker Advanced Micro Devices Inc.

The companies just entered a rare global partnership under which Santa Ana, Calif.-based Ingram Micro has authorization to sell AMD processors across its global distribution infrastructure. Typically, distributor/vendor contracts cover only specific regions.

For Sunnyvale, Calif.-based AMD, the agreement opens the potential to fight for market share against main rival Intel Corp., Santa Clara, Calif., wherever there is a viable IT market in the world.

“It’s good for customers to have a choice. That’s what it’s all about,” said Pierre-Yves Ferrard, AMD’s vice president of worldwide distribution sales, who works out of the vendor’s Geneva office.

For Ingram Micro, authorization to carry AMD-branded processors across its entire global infrastructure will help boost the distributor’s components business.

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The potential benefits for both companies are significant because of the customer segment primarily targeted by sales of AMD processors—unbranded system builders.

While in the United States the market share of “white boxes,” or unbranded systems, is estimated at about 40 percent, that share is much greater overseas. Branded systems make up less than 50 percent of the market in Europe and less than 25 percent in Asia, said Greg Spierkel, Ingram Micro’s president and soon-to-be CEO.

Seeing the potential opportunity, AMD approached the distributor to negotiate a contract that would give the vendor access to Ingram Micro’s sales, marketing and logistics infrastructure, Spierkel said. Ingram Micro is the world’s largest IT products distributor.

“We’re in a selling position in between a half-dozen to 10 countries with AMD today, and we have a pretty healthy relationship,” Spierkel said. With the new partnership, he added, “over time I suspect we could end up working with AMD in all the countries where we have subsidiaries.”

Through the global partnership, Ingram Micro and AMD can expand into new territories together without having to negotiate a new contract for each geographic region, Ingram executives said.

In Europe Ingram Micro already carries the AMD brand in Germany, and with the new agreement the distributor immediately gains authorization to sell the processors in Italy, the United Kingdom and France without having to negotiate contracts for each country. Further expansion in European territories also is covered under the contract, AMD’s Ferrard said.

Will more vendors take AMD’s lead?

Vendors typically have regional or country-based distribution contracts because of currency issues that affect pricing and localized products, said Spierkel. But when it comes to systems-related components such as processors, those issues don’t come into play, he said, adding he hopes more vendors will take AMD’s lead in agreeing to global contracts.

“We have a number of what I would call global relationships, but we don’t have that many global contracts,” he said.

Aside from AMD, Ingram Micro has a global contract with Vodaphone, the world’s largest telecommunications company, that covers mobile and wireless solutions.

Combined AMD and Ingram Micro marketing and sales teams will work together to sell such products as the Athlon 64 and Opteron processors, which AMD says are the first processors to deliver full compatibility with existing x86 solutions and simultaneous 32- and 64-bit performance.

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Ingram Micro customer Darren McBride, president of Sierra Computers, said Ingram Micro and AMD stand to both benefit from the partnership, but this is probably more so for the distributor.

“Ingram needs to attract the white box and component business and has had two main problems in this area, pricing and product,” he said, adding Ingram Micro competitors have offered a broader choice of offerings, often better pricing, for system components.

Ingram executives said the AMD partnership is proof of Ingram Micro’s commitment to the components business, which though very competitive, is a viable market for the distributor.