The SYNNEX acquisition of Comstor raises some important questions about consolidation within the technology sector and where things are headed for the industry. As more companies leverage digital technology, they are extending their boundaries into other market segments and in turn, even consolidating across industries. The lines have blurred significantly between some of the largest technology companies and their focus. For example, Comcast originated as a cable company and is now also considered an internet service provider, a media company, and an entertainment company.
Meanwhile, traditional consolidations are still taking place in the technology sector – the ones where software companies buy other software companies as a means of cost reduction, market penetration and scalability. For companies that want to grow quickly, acquisitions make more sense than waiting for organic growth to occur. For others, they are simply looking to fill a strategic gap that can seemingly be fixed by acquiring those capabilities.
While on-premises unified communications still account for 70% of services sold in mid-size and large enterprises, the trend is undoubtedly moving to the cloud, and some older companies are not ready to take the risk of moving with the rest. Companies that have already moved to the cloud, or have made it clear that they plan to, are separating from the pack.
It’s possible that all of these events have somehow contributed to the SYNNEX acquisition of Comstor, which is set to take place this year. SYNNEX, a California-based IT solutions provider and distributor, is purchasing the entire Westcon-Comstor North America and Latin America businesses and will have a 10 percent stake in Comstor’s $2.35 billion international business, which includes Europe, the Middle East, Africa and Asia-Pacific. After the deal is closed, the new company will be positioned as a leader in the security, UCC and networking markets.
The acquisition is a win-win for both companies, as it will give SYNNEX an extended market position in North America as well as a global footprint in Europe and Latin America. In addition, the acquisition gives SYNNEX an expanded Cisco portfolio. Prior to the deal, SYNNEX was the only North American distributor that didn’t have a partnership with Cisco.
For Comstor, existing customers will now have access to a larger portfolio of complementary technology solutions and services, such as data storage and servers, while broadening the market for existing customers. SYNNEX has a solid track record for M&A, so I’m sure the transition will be a smooth one. In the end, our customers and resellers are at the core of our business and I believe the partnerships and deeper market penetration coming from this transaction will only benefit our existing and future customers.