Don’t get distracted by cloud, says Arrow boss

Arrow ECS’ UK managing director Steve Pearce has mounted a challenge to the current stampede towards the cloud, advising channel firms not to “get too distracted” by the hype around cloud services.
Pearce, recently speaking with Channel Pro, said: “Before we get to the wonderful vision of pure cloud and pay as you go there are a number of barriers...Stop and walk cautiously at it. I don’t think there’s any rush. Three, five, ten years – the cloud dream is so far in the future.”
He does, however, believe there is a massive product opportunity still from the datacentre and private cloud.
“The cloud opportunity is still a product one, and not a service one for next two or three years,” says Pearce. “From a distributor’s point of view, I’d say don’t get too a carried away with services; there’s still a huge opportunity for the chance to build datacentre products.”
Pearce advises channel organisations should focus on designing and implementing products based on cloud infrastructure such as capacity deployment, billing as well as management tools.
“You still need the basic elements – virtualisation, management tools, management infrastructure – it’s still a product sell. It’s a great opportunity to take advantage of the shift in the way technology is deployed from an infrastructure point of view,” he maintains.
Super resellers
Elsewhere, Pearce predicts the UK channel will undergo massive polarisation in the next few years, which will leave a few ‘superpower organisations’ that will dominate the distribution landscape.
“We are slap bang in the middle of the IT consolidation process [and] no more than three years away from the total consolidation and polarisation of the market,” explains Pearce. “The market will be dominated a few super resellers that will transition into full solutions-orientated players. At the other end of scale [there are] small niche reseller organisations [that will have a] couple of key customers. There will be a huge gap between big and small.”
He adds: “I feel confident that in three or four years from now, three or four players [will dominate] worldwide – Arrow, Avnet, Tech Data, Ingram Micro – and everyone else will be rolled up into one of those organisations. They will get caught up in consolidation process.”
Pearce also believes that the number of major vendors will be whittled down “from 15 or 20 vendors to about 10.”
Domination plans
Arrow ECS is a sub division of Arrow Electronics (NYSE:ARW). Over the last seven or eight years, the $20bn a year components business has focused on its hardware, software, and storage and server business. In Pearce’s own words, the firm set out to dominate through acquisition, land grab and the domination of the space through its sheer size and scale.
“We’ve had a really good run in the last few years in the worst recessionary times. We had the right products: storage, security and virtualisation.”
Regarding the firm’s growth strategy, Pearce says “We’ve got to keep growing, getting scale though acquisition to maintain a position in the big four.”