TD Synnex CEO Patrick Zammit On StreamOne Cloud Marketplace Growth, Tariffs And Broadcom CEO Hock Tan’s Channel Commitment

“This is at the core of our value proposition,” said TD Synnex CEO Patrick Zammit. “It’s the enablement so that our customers can win at the end-user level. We’ve done a very good job in that space. Now the platform is competitive and stable, and the combination of the two is paying off, and we are seeing growth as a consequence with the number of active partners and end users.”

TD Synnex CEO Patrick Zammit says the $58.5 billion distribution behemoth has resolved issues that plagued its StreamOne cloud marketplace, which is paying off in growth in the number of active partners and end users.

The StreamOne marketplace—which had “issues” some 18 months ago—is now “competitive and stable” with 30,000 active partners and 500,000 end users, said Zammit.

“This is at the core of our value proposition,” said Zammit in an interview Monday with CRN. “It’s the enablement so that our customers can win at the end-user level. We’ve done a very good job in that space. Now the platform is competitive and stable, and the combination of the two is paying off, and we are seeing growth as a consequence with the number of active partners and end users.”

Zammit would not reveal the number of active StreamOne partners and end customers in the year-ago quarter but stressed that the company has invested “millions” of dollars in building out the functionality and connectivity of the platform.

The latest TD Synnex StreamOne functionality came in January with a Digital Bridge Microsoft Teams plugin.

“The principle of Digital Bridge is you have two options: you can ask your customers to connect on your portal, or you can give them the opportunity [to connect] from where they work in their own app to get access to the data,” Zammit said. “Digital Bridge is exactly that. Think about it. You’re in [Microsoft] Teams. You can download the app. You install it, and now suddenly you have access to all you need to do quoting, backlog management, you name it. That’s the vision, and that’s where we’re investing heavily.”

Zammit said every distributor is investing heavily in marketplace platforms as a “must-have to win” in the market. He compared it to distributors investing heavily in logistics and supply chain management at the dawn of the PC era.

“Today in the new digital world and software-defined world, having the right platform is a must-have,” he said. “If you don’t have it and you don’t have the right connectors, you are not going to be successful, so everybody [in distribution is doing that].”

Still, that is not enough, said Zammit, noting that TD Synnex continues to invest in “enablement” with presales and post-sales resources for partners.

“We found that is an important aspect of the value proposition and the differentiator when it comes to winning at the end-user level,” he said.

Zammit’s comments came after the distributor posted “strong momentum” across its business with all regions and major technologies, contributing to a 7.5 percent growth in billings to $20.7 billion.

In the Americas region, sales were up 6.2 percent to $8.39 billion compared with $7.90 billion in the year-ago quarter.

“North America, in particular, enjoyed a [strong quarter],” said Zammit, noting that double-digit sales growth in PC sales driven by the Windows 11 PC refresh boosted results.

“You have PCs [doing well],” he said. “You have software doing well. You have security doing well. Cloud continues to do well. We still haven’t seen networking coming back. So think about that as probably the next opportunity in front of us.”

An edited version of the of the conversation follows.

What did you see in terms of growth in the first quarter, particularly in the Americas region?

What was very encouraging in Q1 was we saw growth in all the regions, which is not always the case. North America, in particular, enjoyed a [strong quarter].

Through Q4, we saw North America hovering around stable at one percent growth.

In Q1 we saw mid-single-digit growth in the North American market. That’s important to mention because this is new. And interestingly, North America was the region from a market standpoint where we saw a delay in the recovery compared to Europe, APJ (Asia-Pacific and Japan) or Latin America. So I want to call it out because this is a positive message.

What do you attribute that growth to in North America? Are we seeing an increase in IT adoption that you didn’t anticipate in North America?

Transparently, I was waiting for the recovery [in the Americas] a little bit earlier. What we see now, I was really expecting it to already happen in Q4, if not in Q3.

Europe from a macro[economic] standpoint has been under significantly more pressure than North America. Significantly more. But Europe was already growing at between two and five percent. What we saw [up until now], depending on the quarter, was North America being flat, or at two percent growth. That was not logical because of the macro differences.

Now we see the macro still being strong and we have started seeing the impact on the IT demand in the channel in North America.

PC sales were a big [reason]. PC had close to double-digit growth, very healthy growth. The refresh is starting to accelerate.

Customers are not really buying for the AI functionalities yet, but there’s the refresh of the [PC installed] base bought during the pandemic. There’s the refresh because of Windows 11, and that’s driving the demand.

Hopefully the AI functionalities will also pay off, but I would say it’s not the main reason, as we speak. So you have PCs [doing well]. You have software doing well. You have security doing well. Cloud continues to do well,

We still haven’t seen networking coming back. So think about that as probably the next opportunity in front of us.

The server refresh is also here. So there are a lot of opportunities which started to materialize in Q1.

There is uncertainty in the Federal [market] business, but we did well there. We had growth in Q1. But the SLED (State, Local, and Education market) business is strong, and SLED is a big chunk of the business. Again, you have a positive there—a tailwind.

We’ve seen reports of federal government cutbacks, but SLED did really well. Why was that the case?

For us, both Fed and SLED did very well. So we enjoyed nice growth in both. Fed is a small portion of our total public sector business

The future will tell how Fed will perform. But if I look at my total public sector, because SLED is the vast majority of the business, I feel confident for the coming months.

What I hear from our customers is that they believe that the cuts that may impact the Fed business will probably be taken over by the states and the local administrations. Because if the investments are needed, somebody is going to invest, and so probably SLED will take over. That’s at least what I’m hearing from our customers, and that’s the reason they are cautiously optimistic.

You mentioned on the call that with your StreamOne cloud marketplace you now have expanded to 30,000 active partners and 500,000 users. What does that compare with one year ago, and what kind of momentum are you seeing there with partners?

We don’t disclose the year-over-year for the moment for how well we do in terms of the number of active partners and end users. But if you go back one and a half years ago, we had issues with our platform. This has been resolved. We are back and very proactive in the market to sell the platform. But most importantly the platform must have an engine to transact. What we have done is we have invested a lot in our practice builder to enable customers to basically take cloud to market and continue to win in the marketplace.

This is at the core of our value proposition. It’s the enablement so that our customers can win at the end-user level. We’ve done a very good job in that space. Now the platform is competitive and stable, and the combination of the two is paying off, and we are seeing growth as a consequence with the number of active partners and end users.

What do you see as your big differentiator with the cloud marketplace, and how big an investment are you making there to make sure you are providing the most innovative, easy to go to market and profitable platform for partners?

So we invest in two places. We invest, of course, in the platform. You are talking about millions of [dollars] of investments every year to continue to improve the functionalities and to improve also the connectivity of the platform, because it’s very clear going forward, our resellers and our vendors, they want the data exchange, all of that, to be automated.

We just made an announcement on Digital Bridge. The principle of Digital Bridge is you have two options: you can ask your customers to connect on your portal, or you can give them the opportunity [to connect] from where they work in their own app to get access to the data. Digital Bridge is exactly that.

Think about it. You’re in [Microsoft] Teams. You can download the app. You install it, and now suddenly you have access to all you need to do quoting, backlog management, you name it. That’s the vision, and that’s where we’re investing heavily. … We are going to continue to invest heavily in the enablement. So, again, you are seeing increased sales resources to help the customers win.

The investments are first in educating and helping the customers to strengthen their cloud practice and pre-sales resources and after-sale resources for customers to win at the end-user level.

We found that this is an important aspect of the value proposition and the differentiator when it comes to winning at the end-user level . And there we want to invest.

So the TD Synnex Digital Bridge is connected to your cloud marketplace. Is that highly differentiated with its connection to the end user compared with what others are doing with cloud marketplaces?

At the moment every distributor is investing heavily in [marketplace] platforms and its connectors because clearly this is a must-have to win in the market.

To make a parallel, when all the distributors started in the hardware business, having powerful logistic and supply chain management [capabilities] was a must-have.

Today in the new digital world and software-defined world, having the right platform is a must-have. If you don’t have it and you don’t have the right connectors, you are not going to be successful. So everybody [in distribution is doing that]. We are all doing the same thing. We are all investing in the platform to provide the best experience—a unified experience, by the way—for customers and the vendors. But this is not good enough. This is not going to be good enough to enable our customers to win.

For the customers to win, like for every other technology, they need this enablement, and that’s the reason we are making millions [of dollars] in investments. But for TD Synnex it is not good enough. The enablement is also going to be important. We continue to invest in pre-sales and after-sales resources to help our customers.

You mentioned every geography did well. As we relaunch CRN Australia, What kind of results did you see in Q1 for Australia and what are the partner and technology trends there that are different than other parts of the world?

So I can speak about APJ. I don’t have it by country. What I can share with you is that in APJ we had double-digit growth, very solid growth driven by advanced solutions.

By advanced solutions I mean infrastructure, cloud, software, security. That’s where we are very strong. In some countries, we are also an end-point solutions business, which we see, similar in Europe and North America, is coming back. But we have healthy demand.

India is clearly a huge growth driver in that region. You are talking about high double-digit growth in the technologies I’ve mentioned. And the other thing that helps us is we are winning a lot of [vendor] franchises. So in India, for example, we added four very critical [vendor] franchises for future growth: Cisco, HP, Nvidia and Adobe.

This is going to fuel the growth for the future. Our approach in APJ is to look at where are the key markets of today and tomorrow. So Indonesia, for example, we believe is going to be an important market going forward, and so we look at how do we need to invest.

So that’s how we are approaching the region. The last thing I wanted to mention, which may be interesting for you, is we see a lot of tier-two CSPs (cloud service providers) being created in that region. That’s driving demand.

So your message to partners there is to invest in the technologies where you are driving growth: cloud, security, big data, AI?

AI is important. I was in Hong Kong three weeks ago and met with two very important partners for us. So they are suffering from the fact that they don’t have access to the latest chips. But on the other hand, they see the whole demand coming from AI and DeepSeek is interesting for them because DeepSeek runs on chips with lower power, and so they can participate in this whole AI boom, and the demand increasing.

So AI, wherever we are, is important. So obviously the other countries have access to the latest chips, like Singapore and so on. AI is another big opportunity.

Security is a very big opportunity. I mean cybersecurity issues are very prevalent in that region. Cybersecurity is very interesting. You mentioned cloud. I mentioned AI and infrastructure to support AI, lots of demand there as we speak.

Are you seeing any pullback in the AI data center buildout from the hyperscaler customers? Is there any slowdown in AI market adoption?

I’m going to distinguish between the hyperscalers and the enterprise, because we play in both.

For the hyperscalers, we don’t see a drop in demand today. I know that we were below expectations in Q1, and we reduced our guidance in Q2. It is not because we see a drop in demand. It’s more the projects we won. We see the demand for temporary reasons not coming in as expected. So the answer is no.

On the enterprise side, the ramp is slower than everybody would have hoped. AI servers sold to enterprises is still a very, very, very small percent of the total server business. The reason is most companies need to identify the use cases, feel comfortable with the return, and then they will invest.

So we are, I think, in that phase of proof of concept [in the enterprise]. But we are not yet at the adoption/massive adoption level, followed by massive investments. Probably because of the sensitivity of data and the fact that what is really differentiating the companies in the future is the size of their data lake.

We believe, by the way, that’s one of our competitive advantages in our industry. In many cases it will run on-premises. But the future will tell.

With the Hyve hyperscaler business, is there any opportunity for partners to take advantage of that?

Hyve was established to serve the large hyperscalers, and we want to leave it like that. We don’t want to create any conflict of interest with our AI vendors.

How important is that AI enterprise market, and what kind of investments are you making there to drive that business forward?

So we’ve created Destination AI. That’s the name of our enablement program when it comes to AI. It applies to all of the technologies for AI. So not only the servers, not only networking, [but] also PCs.

Here we have invested, as I mentioned, in enablement resources to create awareness, educating them, helping the customers to build their practice. We want them to understand how to position AI with the end users. So there’s a lot of education. So that’s one side of the investment. But then we’ve also now already invested in pre-sales resources and after-sale resources because a lot of our resellers are watching [the AI market]. They don’t feel comfortable making the upfront investment, so they come to us and they use our resources for the moment, and, as they scale, they will then start hiring. So we have a lot of investments in that space.

Arrow has announced it has raised prices in North America due to the tariffs. What specific products are being impacted by the tariffs, and how widespread it is?

For Q1 it was very, very limited. I believe that we are going to see more initiatives in Q2.

Let’s see what the outcome is of this week [of tariffs being imposed]. As you know, there is a big meeting. Let’s see what comes out of that.

I think most of the vendors at the moment are assessing what will be the impact of the final decision. And then we’re going to see a lot of pricing initiatives related to it.

I think at the end of Q2 I’m going to be much smarter on that subject, and I will be able to comment better. But I can tell you at the end of Q1, it was very limited, very limited.

How important is TD Synnex’s role as the No. 1 distributor globally as it relates to helping customers around the globe navigate the tariff situation?

First the vendors, I think, are looking for global partners.

Distribution is a very local business, but when vendors have the opportunity to speak to TD Synnex, for example, which is global, we agree on a strategy on how we are going to help them accelerate adoption of their technologies in all those various markets. That is extremely powerful.

Then what we do is execute locally. It is local execution. Every market is slightly different. But for the vendors having this opportunity, we have our standards in terms of compliance. They know our financial profile. That’s reassuring to them. But most important, we agree on a plan, and we execute it locally. That is very powerful. And then some customers are also starting to globalize.

It’s a much more limited number of customers, but again, we are in a position to support them for their global engagements. So that’s another advantage of being global.

We’ve been following the changes at VMware since it was acquired by Broadcom. How confident are you in terms of Broadcom CEO Hock Tan’s (pictured) commitment to the channel with all the VMware changes?

I think he’s committed. Based on everything I’ve seen he is absolutely committed.

Every time a company is acquired, there are lots of changes. He is redefining the channel policies.

For VMware, the channel is critical, and I think he understands it very well. He knows that this is critical for the success of VMware, and I think he’s absolutely committed to the channel.

You’ve known Tan a long time. How do you view the impact that he will have on the channel?

In fact, I will tell you that the channel is going to be even more empowered.

I will share with you how distribution works in the semiconductor industry. In the semiconductor space, it’s a one-tier distribution model, not a two-tier model. But there is a clear responsibility that lies with the channel. They have to go to the end users and convince the end users. They basically take ownership of the whole end-user space and make sure that they select the right technologies and then implement the technology.

There is a high level of empowerment in the semiconductor space. And I think that his vision is exactly the same [in the VMware software virtualization market]. He wants to empower the channel more to deal with all the customers that don’t fit a direct model from a manufacturer’s standpoint. That’s what he’s establishing. That’s what he’s putting in place. And, of course, he wants it to be profitable. So he has his profitability objectives, but that’s it. That’s my experience on what he has done consistently in the past.