Synnex Partners: Buying Westcon Americas Will Unlock Cisco Goldmine, Support For Global Firms

Partners praised the distributor's $830 million acquisition for opening up new geographies and more vendor relationships in the data center space.

Partners praised Synnex's bold $830 million acquisition of Westcon Americas for opening up new geographies and more vendor relationships in the data center space.

"It's going to bring a larger line card to Synnex and a great foothold inside of the enterprise space, where Synnex isn't playing a large part right now," said Todd Crystal, president of Montreal-based Spencomp Solutions.

Because of holes in Synnex's line card, Tallgrass Technologies, of Lenexa, Kan., has maintained multiple distributor relationships despite relishing Synnex's customer service, according to Bruce Enright, president of Tallgrass. Specifically, Enright said his company has had to turn to other distributors for support around its Cisco, EMC and Oracle relationships.

[RELATED: Synnex CEO: Westcon-Comstor Deal Gives Us Pathway To Expanding Beyond The Americas]

"It's out of necessity because Synnex doesn't carry it," Enright said.

That will all change as far as Cisco is concerned once Fremont, Calif.-based Synnex's acquisition closes in the third quarter of the 2017 calendar year. Cisco is the largest vendor partner of Westcon in North America and Latin America, accounting for nearly $700 million of its $2.18 billion in sales last year.

Westcon Americas is also an authorized Oracle distributor, according to the company's website.

"Cisco has a large product line in both networking and servers," Enright said. "That was a meaningful hole for Synnex."

Although Spencomp uses SonicWall rather than Cisco for firewalls, Crystal said unlocking access to Cisco will be a big win for Synnex, given the San Jose, Calif.-based vendor's great reputation and the number of Synnex partners currently sourcing Cisco from elsewhere.

Spencomp, meanwhile, focuses extensively on security, Crystal said, but was using distributors such as Westcon to get its procurement needs met for some key vendors. Crystal said Spencomp will enjoy more of a one-stop shopping experience once Westcon Americas becomes part of Synnex.

"It's not just a firewall you need," Crystal said. "With this acquisition, Synnex will be able to do everything in house. The reseller isn't going to have to source things on their own."

From a geographic standpoint, Enright said he has seen consistent demand for global support from a select number of larger customers. Tallgrass today often goes outside of distributors to support its clients beyond North America, Enright said, relying on other third-party entities or reseller-to-reseller authorized vehicles.

But Enright acknowledged this arrangement isn't the best for all, especially since the resellers with global needs tend to have deeper pockets.

"To solve a big piece of it [global procurement] through distributors would be great," Enright said. "It would simplify the path to fulfillment for customers."

Also, Synnex will, for the first time, gain a foothold in Latin America with its purchase of Westcon's 800-employee, $517.8 million business across 12 countries in the region. Synnex will also own a 10 percent stake in Westcon International, which does $2.35 billion of business across Europe, the Middle East and Africa, and Asia-Pacific.

"It's going to make everyone else's life easier," Specncomp's Crystal said. "It's an exciting time."

A number of Spencomp's U.S. and Canadian customers, have taken advantage of the North American Free Trade Agreement (NAFTA) to shift some facilities and labor to Mexico or other parts of Latin America, Crystal said. But that has left them without a distributor in the region. Spencomp has needed to handle these situations on an ad-hoc, case-by-case basis, Crystal said. For instance, Crystal said one of his North American customers brings SonicWall equipment down to his Mexico facility when he travels there because he can't use a distributor.

"Expanding their line card in the data center is well-timed," Enright said. "I'm glad to see Synnex in a position to make this kind of an investment."