Ingram Micro 2008 Annual Report Download - page 13

acquisitions in the AIDC/POS market have strengthened our presence in this adjacent product space and
positioned Ingram Micro as the only global distributor of AIDC/POS products. We remain focused on
expansion in the mobile convergence market and on building security solutions. Our diversification in
product and customer segments extends market opportunities for our vendors and has been a factor in our
receiving exclusive authorization from certain vendors that are rationalizing their channel strategy in
response to the economy. We enable reseller partners to sell and support complex infrastructure solutions
and effectively compete against large systems integrators through our Infrastructure Technology Solu-
tions Division in North America and similar groups in other regions. Product line expansion in this
business segment has been focused on products and solutions that bring higher productivity to our
partners, such as affordable virtualization solutions and storage offerings. The economic downturn has
been especially pronounced in the consumer segment where we continue to explore ways to profitably
grow our CE business. For example, IM Australia added a consumer and home office division to expand
the addressable market for its IT resellers. In support of our strategy to diversify revenue streams and
expand addressable markets, we continue to execute on our private label business under the V7 brand,
with a focus on computer accessories, peripherals and supplies distributed in 30 countries. Overall, we
believe that our diversified product portfolio will provide a solid platform for growth while softening the
impact of lower demand in specific categories.
•Services. IT Services is one of the fastest-growing and highest gross margin segments of IT spending.
Ingram Micro is intent on building its service offerings which will enhance our gross margin profile with
no inventory risk while allowing us to bring additional value to our customers and become more
connected to our resellers’ end-user customers. Ingram Micro Services Division (North America)
continues to build its industry-leading managed and professional services delivery engine, branded
“Seismic.” Managed services utilize application and technology tools to more effectively and efficiently
manage an end-user’s IT environment while affording the solution provider significant remote capabil-
ities, service efficiencies and corresponding improvement in profitability. These services tend to be
infrastructure-intensive and would burden service providers with investments in data centers and large
server installations were they to deploy the services independently.
Ingram Micro Logistics provides end-to-end supply-chain services to manufacturers, software publishers
and retailers on a fee-for-service basis. We optimize our partners’ supply chains with scalable logistics
services that reduce costs, create efficiencies and improve execution. Ingram Micro Logistics enhances
service with high levels of order and inventory accuracy, on-time shipping, and world-class logistics
centers. We specialize in multi-channel solutions that require flexible scale and a superior end-customer
experience. Services include order management, warehousing, fulfillment, transportation management,
customer service, returns processing, kitting and IT connectivity.
In addition, we also surround products and programs with our own services to resellers, such as technical
support, financing and training. During 2008, we launched a service to help resellers easily identify
“green” electronic products using an environmental rating system. This service is especially helpful for
government resellers bidding on government contracts. Although services represent one of the key
initiatives of our long-term strategy, they have represented less than 10% of our revenues in the past and
may not exceed that level in the near term.
•Customers. Our focus on diversification extends to the wide-ranging customers we serve in each of our
regions. Our customer segments are distinguished by the end-users they serve and the types of products
and services they provide. The small-to-medium sized business (“SMB”) customer segment is generally
one of the largest segments of the IT market in terms of revenue, and typically provides higher gross
margins for distributors as it is more challenging for suppliers to penetrate. Our programs and services are
geared to add value to value-added resellers (“VARs”) and solutions providers that serve as technology
sources for the SMB market. We serve VARs with a complete “go-to-market” approach to a VAR’s
business, including logistics, sales, marketing, technical, financial and services support, enablement
training, and solutions development, as well as expand their end-user reach through end-user demand
generation marketing programs. Our diversification strategy — which opened new markets in AIDC/
POS, CE home automation and entertainment, and mobility products — offers new customer segments
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