Tech Data is a large technology distributor. It has for the longest time helped companies like Apple. Microsoft, Cisco, and HP bring their products to the market. It also offers a broad range of technical and business support services.
Currently, Tech Data is merging with Synnex in a technology distribution deal worth $7.2 billion. Ingram Micro, the combined distributor, will have a team of 22,000 employees and an estimated $57 billion in pro forma revenues annually. The combined Synnex-Tech Data merger is predicted to generate $200 million in synergy benefits two years from now. Here's what Tech Data and Ingram Micro customers had to say about the merger.
Poor Operational Process
Robert Davis, the Chief Executive Officer, Network Security Associates, Inc., says that this change doesn't directly affect his business. At the present moment, the company does not purchase any products from Tech data. The main problem is that the prices are not competitive enough. As a result, Network Security Associates moved their business to Ingram Micro and have been there for several years.
Occasionally when the company has a request for a unique item like a video kiosk, they may buy from Tech Data. Some products come with a higher price value from Tech Data compared to other vendors.
"Tech Data also has had stock issues and tends to make us wait for parts," Davis continues to say. As though this is not enough, billing and invoicing by Tech Data is such a hassle Davis would rather avoid. If Tech Data would work on its availability of products, pricing, and invoicing, the company would be willing to consider purchasing from them again. Unfortunately, it would be a slow process to determine if the bugs in the processes have been fixed before placing another order.
Red Tape is Bad for Business
Demetrius Cassidy, the Founder and President, In The Cloud Technologies, has a closely similar opinion. He says that his company would rather work with other organizations like Pax8 whenever possible. Although Ingram Micro and Synnex have better price margins, they're slow in their operations.
Cassidy notes that working with large corporations is usually a long process marked with regulations and excessive standards. There's also no single point of contact, which makes the process more tedious. While the hardware margins are always awful and have no impact on his company, he foresees no future business with Synnex. He hopes that the merger will have some positive outcomes, especially for customer experience. However, he is almost sure that it will only get worse and not better.
Less Competition Means Less Business
Cassidy notes that the merger will mean less competition for Tech Data and Synnex as individual entities. Less competition is never healthy for business. Going forth, it will only be Ingram Micro vs. Synnex-Tech Data.
To make matters worse, Ingram Micro is being taken by an equity firm. There's a high probability that the company won't exist a year from now. The equity firm will use Ingram Micro to rack up profits then sell it off to a third party.
Looking at it from the positive side, "it'll be an opportunity for the small and better distributors (like Pax8) to grow and thrive," Cassidy concludes.
But another executive has a different thought. Carl Fransen, Founder and CEO, CTECH Consulting Group, thinks this is a step in the right direction. When Synnex and Tech Data merge, they will become a powerful force. Together they will effectively compete against Ingram Micro, which has been the largest distributor for years.
The Good and the Bad
While some executives have a firm stand about the merger, others are experiencing mixed reactions. Nick Allo, the Director of Communications, SemTech IT Solutions, says that the move is both good and bad. The good is that businesses that purchase Tech Data products will have access to more stock because of the combined efforts.
On the downside, he feels the experience they had with Synnex was a lot better than what they can expect from the merger. Synnex always offered competitive pricing, and he can't help but wonder if it will be the same with the merger. The buying experience was also smooth and fulfilling. "Like every Merger and Acquisition, only time will tell the outcome. However, the service will suffer, and businesses will remain stuck with the pain," Allo states.
There is also a foreseeable price increase after the merger because of less competition. Smaller distributors will suffer, and there will be challenges in distribution and licensing. Overall, Jorge Rojas, partner at Tektonic Inc., hopes that the efficiencies of TD and Synnex will improve.
Ilan Sredni, CEO and President, Palindrome Consulting, echoes these thoughts. His open but humble opinion is that the move is a terrible one. The only leverage businesses are left with is that they can pin one distributor against the other. The field will narrow down, decreasing competition. "Monopolization of this space is a big mistake that should not be happening in the first place."
Hope for a Better Future
For some businesses, it's not all gloom after all. Paul Bush, the Principal Consultant, OneSource Technology, Inc., is looking forward to the merger. His company is a customer of both companies forming the merger. He says that they expect to see a richer product and service line and improved customer service.
Synnex has been one of the primary distributors at OneSource Technology. The service has been exceptional, although there have been times they couldn't get what they needed. As such times, they would buy from Tech Data. In his opinion, the combination will make the two companies a more convenient "go-to" distributor.
IT Network Solutions Group, Alec Light, is indifferent about the change. He suspects that his company won't see any significant changes in a while. He doesn't expect to feel the impact of the merger too much.
Final Thoughts
The merger of Synnex and Tech Data has been received with mixed reactions by the two companies' customers. While some have welcomed it as a good move, others are downright disappointed and wish it didn't happen. Overall, only time can tell if the outcome will be good for business.
