MSPs Happy, Surprised, Concerned About Synnex-Tech Data Merger
Some think the merger is terrific. Others worry about less choice and potential layoffs. It depends on whom you ask.
March 25, 2021
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“I’m not happy about it. I rely on having multiple distributors to keep each other honest on service and pricing. We still have Ingram Micro of course, but I see this as a negative transaction for the channel, creating more of a duopoly and reducing competition.”
“As long term Tech Data partners ,we are excited to see what added value comes from the merger. We rely on our channel partners to bring us expertise, value and reliability. Hopefully, this is a sign of their commitment to those pillars.”
“I think it’s a good thing — bigger, better and more choices for the MSP. I also think the size adds a better chance at pricing at scale. We like Synnex and are excited about the merger.”
“It will be interesting to watch how this merger impacts our decisions and directions moving forward. Specifically, whether the innovations, offerings, or value-add of the combined entity start to outpace what we currently experience with Ingram Micro. For the time being, status quo (albeit with heightened scrutiny).”
“Both are old-school and neither are keeping up with the times. Contrast to forward-looking disties and vendors that get the MSP challenges, like Pax8.”
“In general, we believe the consolidation efforts in our industry are simply a continued indication that further attention is being placed on the MSP marketplace than ever before, especially by the private equity and major financial markets. This is good news for those MSP/MSSPs that are committed to continued maturation and scale of their operations in order to meet the market’s demands.
“In specific regard to this merger, I think there is a general concern around the quality of service from the Tech Data team, which has been an increasing issue over the past 18 months or so.”
“Every MSP probably looks upon this with trepidation, and I cannot count the number of times promised synergies have dissolved before they ever crystalized. However, knowing how jaded the past few years of PE and M&A activity have left us as a group, I am certainly willing to entertain the possibility that this time it will be different. Let’s hope that guarded optimism is not misplaced.”
“We have several distributors that we work with. Consolidation at the very least allows us to streamline our processes down to one less distributor. But we are cautiously optimistic that the combined company will be able to create additional solutions and pathways for MSPs to continue to provide the right solutions and services to take care of existing clients and grow revenues.”
“We are a partner with both Synnex and Tech Data and generally I don’t have anything negative to say as far as their offerings go. For large volume stuff, I like them both. For general orders, less than [$10,000], we haven’t utilized disties in a long time since Amazon Business usually eats their lunch anyway; better/comparable pricing with faster shipping teams have made VARs the old guard that we don’t go to anymore.”
“We have accounts with Tech Data, Synnex and Ingram Micro. While the merger could produce efficiencies through economies of scale with the cost savings passed through to MSPs reselling their products, it could also have the potential to stifle competition, leading to higher costs and lower margins for MSPs. I’m going to take a wait-and-see attitude.”
“This merger is expected to supercharge purchase power of the combined entities of Synnex and Tech Data across the MSP ecosystem. It should also drive efficiencies in operations making the distribution landscape more competitive adding additional margin for MSPs. It has never been a better time to be in this industry!”
“Distributors play a critical role in enabling MSPs to purchase, provision and integrate technology platforms. This merger will increase the velocity of innovation and ultimately make it a competitive landscape, which will benefit the MSP community as a whole.”
“I think this represents a really exciting opportunity for the channel. Our growth plans over the next three to five years focus heavily on emerging technologies and the new lines of business and profitability they bring with them. By combining these two industry leaders, I can really see them being able to help us meet the challenges of delivering on these opportunities. I’m looking forward to growing our partnership with the new company and expanding what we can offer to clients as we continue to build modern, secure offerings for our [them].
“The merger of Synnex and Tech Data is a key watershed moment in the distribution space. Distributors are typically operating with minimal margins and banking on driving large volumes. This merger is likely to drive operational efficiencies and most importantly better value for the shareholders.
“The combined entity will have a much larger partner ecosystem and customers will have access to a much bigger portfolio that includes cloud, IoT, cybersecurity, etc. MSPs like us are optimistic that this powerful merger will translate to revenue growth across the globe with access to diversified offerings, next-gen technologies and cross-selling opportunities. As an MSP with global expansion in the offing, ZNet Technologies looks forward to this consolidation of the IT distribution sector.”
“As a 21-year-old MSP, I must say I’m surprised it took so long. We feel that if done right, it should be a very good marriage. Both companies bring strong creds to the union along with efficient operational structures and strong, loyal followers. Their combined buying ability should make them a powerhouse over the coming decade and possibly beyond. Looking forward to seeing what the new operation will do.”
“I am hopeful that a combined TD/Synnex vendor will have greater ability to deliver a first-class distributor experience to MSPs. This would include additional support resources from sales to technical consulting. My concern, however, is that we now have one less vendor to order inventory from. It’s been a challenging year for hardware fulfillment and now we’ll have one less vendor option with items in stock.”
“We’ve seen massive consolidation in the technology space, so to see the first big distribution arms merge to strengthen and – let’s be honest – compete against Ingram, which was the largest, was no surprise. From a global standpoint, Tech Data has further reaches than Synnex. It gives us more power there. I also think that each of them have different strengths and relationships with different OEMs. For example, Tech Data has a strong Dell EMC relationship and an older relationship with Cisco. On the other hand, Synnex holds a strong HP relationship and Lenovo. It’s bringing together companies that have varying strengths in different technologies.
“Synnex has always had a customer-first culture and has done whatever they can from the top of their executive management to help enable that. I think that’s a strong culture within that organization, and I will be curious to see if that will continue.
“I’m not so sure how much consolidation can continue to exist, but I think it’s just the nature of the industry. We are changing at a pace that’s faster than ever before, and the need to continue to pivot from traditional hardware sales to service provider sales, and cloud sales is more omnipresent than it’s ever been. I think you’ll continue to see companies that have varying strengths merge together to compete in that space.”
“As an MSP serving the U.S. market and abroad, the news of Tech Data and Synnex joining together to form a major distribution offering to support managed service providers of all sizes is exciting to consider the breadth of product availability and support infrastructure they bring together.
“With product availability being stressed over the last year and beyond, strong distribution partners are critical in delivering solutions to our clients of all sizes. Also, as distribution competition heats up, MSPs do have many choices in whom they go to for support in the cloud and software-as-a-service world; hopefully, this merger will allow them to continue to provide solutions that help us support our clients while remaining competitive and profitable.”
“I think the merger is great for the distribution industry. Both Synnex and Tech Data deliver an exceptional service and have been a pleasure to work with. I think that this does help the partners because it combines things like volumes to drive higher marking/financial resources that might have been held back. We worked with Avnet, which is now AVT, purchased by Tech Data, and the experience and transition was easy for us. Congratulations to both organizations.”
“To be honest, I’m really surprised by the merger. I can see the added benefit they bring to each other and against Ingram Micro, but I also see a lot of overlap in the cloud arena. I worry about teams of people being cut and layoffs coming due to that large overlap.
“I wish them well to hit their targets of $100 million year-one savings and $200 million by end-of-year-two savings, but those are huge markers to hit and will be tougher if they still need to strategize on the areas to focus on.”
“As the industry shifts toward XaaS consumption of IT life cycle services, the consumption of these services will continue to change. The consolidation of Synnex-Tech Data will create a better competitive landscape, allowing the transformation of the industry and how the MSP community services its clients with these new consumption models.”
“Of all the distributors we work with, Synnex by far provides the best level of service. As such, we rely on them heavily for not only products but also monthly cloud and hardware-as-a-service offerings. They are a true partner and we lean on them often. With this merger, the hope is that Tech Data inherits the partner-first mindset of Synnex. Should that go the other way, the impact to our company would be significant.”
“Every five to 10 years, the IT market goes through crazy acquisition/consolidation phases. I remember going through this in the mid-90s and several times since then. It will happen again. As for MSPs, we’ll lose some of the flexibility and personalized services that smaller vendors were able to offer before they were taken over by the big-money folks. In theory, the larger owners will be able to invest more into the products, but that doesn’t always happen.
“Meanwhile, dozens of new small companies are being started each month, hoping that they’ll end up in a similar situation soon.”
“I think this is great news for the MSP marketplace, and will hopefully create more opportunities for us all. Consolidation to one distributor means better pricing and better service, and ultimately is better for our customers.”
“Bigger isn’t always better, as it narrows the channel, reduces competition and creates a monopoly in distribution. Tech Data and Synnex have two very different cultures — this is going to make integration difficult as there is no core alignment.
“While each company does have some “unique” products and services, there is a lot of overlap that will have to be sorted out.
“Competition is good for everyone; more choice is good for everyone —customers, MSPs and vendors alike. Over the years it seems that the channel has narrowed into an almost “super-channel” for distribution. This isn’t good for anyone. A top-of-mind analogy might be our health care system in which HMOs and PEOs were to be a concept in which bulk was going to be good for everyone. In reality though, it has led to less choice and a displacement of who the customer really is. Is it the patient or is it the insurance company? Likewise, I think a parallel could be drawn with these super-channel distributors. Who is the customer, the MSP or the manufacturer? What choice will you have if you only have three or four approved distributors from which you can purchase?”
“We have been running nearly all of our distribution business through Tech Data for many years, and while I have some concerns, I think that the acquisition will be a mixed bag. I like the possibility of Tech Data adopting some of the unique strengths of Synnex and having a wider set of fulfillment options will benefit Portland Internetworks.
“Longer term, the elimination of a competitor could have a negative effect on pricing and innovation. And, the integration and assimilation of Synnex into Tech Data will definitely be an operational distraction for at least a year. Honestly, though, it’s not a huge surprise considering that Tech Data was purchased and taken private as Apollo saw a consolidation opportunity. We’re going to wait and see, but initially, I don’t view it as an immediate threat to our business.”
“I think it can be good for MSPs overall. It certainly is good for the overall maturing industry. However, I have concerns about what they plan on doing with product lines and stock availability. I am sure they will be doing some consolidation of locations to focus on expense management and scale economies.
“That can lead to some challenges for us. We currently use five different distributors today to fill requests from our clients. We still have challenges with availability. Also, there is a distinct difference for us in the service we receive from each of them. Synnex is our primary because we have a dedicated rep with a backup team. I would hate to lose that feature … only time will tell.”
“Like most mergers, MSPs worry about their account relationship sliding downhill. It happens commonly with these types of mergers. If Synnex-Tech Data can make people feel confident that will not happen, we as MSPs can see some positive upsides.”
“I have never seen a time when fewer buying options for MSPs was a good thing for our customers. With less competition in hardware deals, it is likely that MSP profits on hardware and software will further decline.”
“It is an interesting merger. As a partner of both distributors, I am curious how this will affect not only the great partner programs offered by each company, but the direction both will take. As an MSP, we hear of M&A quite often these days, so there’s a hint of worry that things may not work out in our favor. I am hopeful this will bring the best of both companies in one entity.”
“I guess the best description that I can provide at this point (with limited info), is cautiously optimistic. We work with both organizations and appreciate specific capabilities of each. The trick for the new organization is going to be to take the best of both companies and creating a better outcome. If either of them dominate the new way of doing business and lose the benefits of the other, the MSP community will lose.”
“I guess the best description that I can provide at this point (with limited info), is cautiously optimistic. We work with both organizations and appreciate specific capabilities of each. The trick for the new organization is going to be to take the best of both companies and creating a better outcome. If either of them dominate the new way of doing business and lose the benefits of the other, the MSP community will lose.”
This week, Synnex and fellow distribution giant Tech Data announced a $7.2 billion mega merger. The combined company will have an estimated $57 billion in annual revenue and more than 22,000 employees. It will serve businesses in more than 100 countries across the Americas, Europe and Asia Pacific. Partners and customers will have access to more than 200,000 products and services.
This is not a casual deal — we’re talking about two of the world’s largest IT distributors here. We asked a few of our MSP 501ers to weigh in on the Synnex-Tech Data merger, and what they think it means for the mainstream MSP. The responses we got were varied, to say the least. Some are happy about the merger and think it makes sense for the two companies, as well as the industry as a whole. Others… not so much.
Some say bigger isn’t always better, while some think a little healthy competition never hurt anyone. Some hail this as a boon for the MSP marketplace, while others see it as a negative transaction for the channel.
Scroll through our slideshow above to see exactly what our MSPs think about this major industry shake-up.
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