Ingram Micro Inks Distribution Deal with SoftLayer
Ingram Micro Cloud, a unit of Ingram Micro (IM), signed a deal with IBM's (IBM) new cloud services division, SoftLayer Technologies Inc. Per the recent agreement, Ingram Micro will distribute SoftLayer cloud services to channel partners in the U.S. The financial details of the deal have been kept under wraps.
SoftLayer, the cloud services division of IBM SmartCloud, provides a wide range of cloud-based products and services to business enterprises. These services will provide the infrastructure for implementing cloud computing but in a cost effective way. It will also accelerate the integration of public and private clouds.
Moreover, it will provide customized privacy, data security and computing services to its clients. We believe that the distribution of these services in the U.S. will benefit Ingram Micro, thus helping it to expand its market share and increase sales growth.
Ingram Micro’s Cloud Marketplace is a global platform through which channel partners and professionals can avail required cloud services. First launched in North America, the Cloud Marketplace was quite well received, which prompted the company to launch it globally.
The current alliance enables Ingram Micro to upsell and cross sell SoftLayer cloud-based products and services that will help its channel partners. These solutions will also aid Ingram’s channel partners to price their cloud-based services in a customized manner.
On the other hand, leveraging Ingram Micro’s distribution channels, IBM will be able to market its products easily and expand in newer markets as well. Ingram Micro’s initiative comes at an opportune moment as cost benefits of cloud computing are compelling the companies to engage in massive information technology restructuring and upgrades.
According to the latest study by IHS Inc., spending on cloud-based services should surge almost three times and reach $235 billion in 2017 from $78.2 billion in 2011. We expect this to work in favor of distributors like Ingram.
Ingram Micro has been striking distribution deals with a number of original equipment manufacturers, thus expanding its product portfolio. Moreover, the company’s exposure in cloud computing products is expected to drive growth.
We believe that an improving IT spending trend will help Ingram to post better results, going forward. Moreover, the company’s focus on the high-margin market and strategic acquisitions to increase market share are encouraging. The BrightPoint acquisition is also expected to remain a key growth driver for the company.
Though Ingram Micro’s significant European exposure and a high debt burden are concerns, we remain fairly optimistic about the company’s strategic relationships with network giants such as Juniper Networks Inc. (JNPR) and Cisco (CSCO).
Currently, Ingram Micro has a Zacks Rank #3 (Hold).
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