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GTDC Newsletter: Spring 2008 Edition
This issue at a glance...
You Got that Right - or Should!
Quick study of IT distributors reveals 'golden' value proposition;
help spread the word to those who don’t yet 'get it'

By Tim Curran CEO, Global Technology Distribution Council

The difference between perception and reality is often miles apart.

While IT distributors, for example, have essentially overcome the old misconception that direct sales may ultimately replace them, it's still often a misunderstood or underappreciated industry.

At the GTDC, we continually promote to IT vendors, investors, industry analysts and others the importance and unique value of distributors within the overall IT ecosystem. In many respects, this message is readily grasped because, among other reasons, we share compelling reliable statistics that tell the story. We encourage you to also leverage this information or invite the GTDC to speak at one of your events. Our presentations can open eyes and minds to how this industry has evolved and why distributors today are now more connected and indispensable than ever. In addition, we can help your audiences see and capitalize on the latest trends.

A recent article published by a leading provider of stock market opinion and analysis sums up what many on Wall Street may be currently overlooking:

"In America's great Gold Rush in the 1800's many prospectors went bust looking for gold while the real money was being made in outfitting them with picks, shovels and other equipment needed for the endeavor. In today’s world where technology changes quickly, perhaps it’s time to be investing in the equivalent companies that supply to the 'prospectors' [read: tech manufacturers] rather than the innovators themselves."
At the GTDC's recent Investor Relations Conference in New York, we worked hard at getting this type of point across as well as another undeniable reality about distributors; while true that it's a relatively low-margin business, the industry's high gross revenues fuel corresponding business models and healthy ROI.

The vendor community also has a much more favorable view of distributors these days. They know how cost-effective the model is for them and why it makes sound business sense to typically leave channel services, logistics, solution delivery and support to distributors -- clearly the best-equipped companies to do all this right.

Despite strong cash flow, book values and earnings over the past year, IT distributors are undervalued on Wall Street. Economic uncertainty contributes to our communication challenge, of course, but when sales power up in a big way, those investors who literally put stock into these dynamics and the real state of IT distributors will reap the benefits.

As a distributor representative, vendor executive or industry analyst, we look forward to helping you – and your respective audiences – know the full story. Let us know how the GTDC can support your messaging!



Investor Relations Conference Takes
'Distribution 2.0' to Wall Street

The Global Technology Distribution Council hosted its fifth annual Investor Relations Conference (IRC) in New York City, May 8, 2008, bringing together the chief executive officers of the world’s leading IT distributors and 70 of the top financial analysts covering the technology industry.

Access a Webcast replay of the 2008 IRC event. Access slide presentations from the event.

The conference, held at the Millennium Broadway Hotel in New York City, included detailed reports of the financial performance of IT distributors, current market dynamics, and innovative ways that leading IT vendors and solution providers are partnering with distributors throughout the world.

Topics ranged from distribution industry growth drivers and new IT channel business models to fundamental ways in which the SMB market has changed and how specialization is defining a new era in the industry. Diverse panel discussions and breakout sessions gave attendees a well-rounded perspective of the industry, market conditions and individual distributor focus areas.

Key Messages:
  • The SMB market – a distributor "sweet spot" - remains a key strength.

  • Distributors are delivering strong absolute and relative financial performance.

  • Although distribution is a relatively low-margin business, the industry's high gross revenues make for an undeniable value proposition for investors, particularly as sales power up.

  • Distributors are often undervalued despite strong cash flow, book values and earnings.

These and other primary messages were reflected in analyst reports and even the blog of a reseller who participated in the solution provider panel, which attendees gave particularly high marks this year:

  • Excerpt from Tech Sector Shifts to Emerging Markets Goldman Sachs IRC report (published on Barrons and MarketWatch as well as financial Web site news sections of all the public companies mentioned, including several major vendors such as HP, Cisco and Dell, as well as the distributors referenced):

    "In addition to HP, which has a long history with two-tier distribution, our checks suggest that several key OEMs, including EMC, NetApp, Cisco, and others are increasingly shifting revenue to the channel to better tap the faster-growing emerging economies and small and medium-sized business markets."

  • Excerpt from So Who Needs a Distributor blog published by Arlin Sorensen, CEO and President, Heartland Technologies:

    "The most amazing statistic I heard was that the 100B in sales from the disties is out of a total sales bucket of 1T (T as in trillion) so they are only getting today about 10% of the total technology sales worldwide and the general attitude was lots of optimism as there is certainly plenty of upside for them."



GTDC Hosts First European Investor Conference

The GTDC’s first European Investor Conference, June 11, gave investment analysts and media in the region an up-close look at the distribution industry. Held in London with 60 attendees at the Wyndham Grand London Chelsea Harbour, the event featured a variety of compelling panel sessions and speakers, including Pascal Cagni, EMEA President of Apple, and Steve Houck, VMWare’s vice president of partner sales.

In addition to perspectives on how distribution enables vendor channel success, GTDC Managing Director Peter van den Berg conducted a session on "The Impact of the Credit Crunch" with participating GTDC distribution member CEOs and presidents; and GTDC CEO Tim Curran moderated "SME's Grow Up: Bigger, Better, Bolder," a panel that provided an in-depth look at what's different about small-to-medium sized businesses today and the implications for the world's leading distributors. Context, which recently announced a sales tracking service with the GTDC in Europe, presented on European market trends and insights.

Media attending the event published a broad range of related articles including Getting the Global View, which appeared in CRN UK.



Distribution Execs Convene
With Vendor Leaders in London
Over 20 channel executives from top IT vendors in Europe engaged distribution industry leaders at the GTDC European Vendor Workshop in London, June 12. The event, which immediately followed the European Investor Conference, focused on emerging industry opportunities and challenges in the region, including working capital constraints. Sessions also covered in detail the latest product and service developments in the European market, with unique third-party perspective in presentations conducted by leading analysts and researchers from Canalys and Context.



Preparing for GTDC Summit 2008
Sept. 16-17, 2008
Fairmont Newport Beach (Calif.)

The Global Technology Distribution Council is ready to make this year's Summit the most impactful and rewarding in its seven-year history of hosting this exclusive conference – the only one of its kind, bringing together the world’s top distribution industry executives and the channel leaders from today’s most influential technology vendors. The event is by invitation only. Send related inquiries to info@gtdc.org.


About this Year's Event
The distribution industry has reached a dynamic new level of engagement with IT vendors throughout the world. Partnerships are expanding and diversifying like never before. This year's GTDC Vendor Summit provides unparalleled insight and perspective on the current landscape and what to expect. Attendees will gain a deep understanding of the trends and how to continue strengthening supply-chain efficiency, channel reach and profitability. Save the date now for this invitation-only event specifically for the channel executives of the industry's most significant IT companies. An excellent line-up of speakers and sessions is planned.

Tuesday, September 16th
6:00 p.m. - Meet Your Partners Dinner & Rising Star Awards Ceremony, with keynote remarks by Mark Hurd, Chairman, CEO & President of HP. A great event to network with your peers and the top executives of today's leading IT distributors throughout the world.

Wednesday, September 17th
8:30 a.m. - 4 p.m. - Keynote address by Matt Medeiros, President and CEO, SonicWALL; engaging sessions, panels and speakers make this informative day of critical importance to all IT channel executives.


GTDC Summit at a Glance
  • The only event that brings together the top executives of the world's leading IT distributors and vendors, representing all business models, products and technologies

  • New opportunities are emerging in distribution - know what they are and how to capitalize

  • Compelling speakers and sessions give you information and knowledge you won't learn any other way

  • Facts and figures combine with first-hand experience of participants and speakers to provide a complete perspective on IT distribution

  • Attendees engage directly with panelists, moderators and other participants to get answers to key industry questions

  • Includes the solution provider perspective and how the channel is looking to bolster relationships with distributors and vendors

  • The 3rd Annual GTDC Rising Star Award Winners will be announced - the most prestigious honor in IT distribution ... learn who is growing the fastest based on 2008 sales to date as reported in the NPD Group's Distributor Track service

New Database Provides Unprecedented
Technology Sales Insight in Europe

The GTDC leverages comprehensive distribution industry databases for market trend insights as part of its overall communications. T his now includes the launch of a new database that tracks distribution sales across Europe. Offered in conjunction with London-based Context, Europe's leading independent IT consumer and business technology market research company, "SalesWatch - DistributionSM, follows the success of a similar service, The NPD Group Distributor Track®, in the United States. That offering, introduced in October 2002, and the Context service are both available by subscription.


The Final Word: Helping Solution Providers
Maximize Distribution Partnerships

The new online publication, IT ChannelPlanet, gives solution providers a broad perspective of key trends, news and analysis relevant to channel business models. Check it out - including a column by GTDC CEO Tim Curran focused on how IT distribution is changing and the ways solution providers can optimize related partnerships.


     
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