Storage, Servers, Software Boom for Avnet in Q2
The big data explosion and a growing concern in the C-suite that IT drive efficiency and productivity mean that storage is selling. And it's selling well, according to value-added distributor Avnet Technology Solutions.
The Phoenix, Ariz.-based company announced its second quarter earnings for fiscal year 2012 on Jan. 26, and storage was its big seller around the world, followed by industry-standard servers and software. Servers and software grew by 35 percent, year over year, and storage was up more than 20 percent, the company said.
"Overall we saw terrific growth in storage. We saw growth in storage for Avnet TS globally north of 20 percent and that continues to be strong," ATS Global President Phil Gallagher said.
When analysts on a Jan. 26 call questioned whether the company was satisfied with 20 percent growth, Gallagher responded in the affirmative. "Storage is our largest technology. Larger than servers. When you get into that size numbers, 20 percent? We were pretty pleased," he said.
Gallagher said the company sold between $600 million and $900 million worth of storage solutions during the quarter. He declined to be more specific.
Driving the storage growth, he said, were industries like banking, retail and health care that are creating larger stores of digital data. "It's naturally going to continue to grow, but the key is how to continue to grow the value around storage as a total solution," he said. "A lot of the things we're driving around solutions and they're driven by services and software."
Business leaders leveraging IT to become more efficient and productive are helping drive solutions growth, Gallagher said.
"I think if you take a step back and you look at what's happening in the C-level suites today of our end users, everybody is trying to become more efficient and they're looking to protect threat and protect their information and become more productive," he said.
Avnet itself is trying to become more efficient through IT. "If we can invest in IT that's going to make us more competitive in the market, we're going to go do it," he said.
Industries such as health care, finance, government and retail are growing. Avnet's health care solutions practice grew between 20 and 30 percent last quarter, Gallagher said. "They're the verticals we're continuing to drive our energies around."
To help solution providers looking to grow their businesses in these vertical markets, on Jan. 24, Avnet launched its new SolutionsPath Engagement Service, a consulting service that will help VARs create tailored business plans and become market experts.
"I think the big opportunity there is how do we continue to work with our partners to enable them and to continue to better understand the need and the opportunity there," Gallagher said. "And we enable them, so with their success, we're going to win."
The Technology Solutions group reported revenue of $3.1 billion, down 3.5 percent year over year, but revenue in the Americas was up 19 percent sequentially. The company's overall revenue for the quarter was $6.69 billion, down 1.1 percent year over year.