Ingram Micro 2011 Annual Report Download - page 15

We are focused on increasing our penetration of the wide range of customers we serve in each of our
regions, as well as extending our reach into new customer segments. 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 number
of customers and total revenue, and typically provides higher gross margins for distributors as it is more
challenging for suppliers to penetrate directly. Our programs and services are geared to add value to VARs that
serve as technology sources for the SMB market. We serve VARs with a complete “go-to-market” approach to
their 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 and business intelligence tools. Our business evolution strategy — which opened new
markets in AIDC/POS, CE, home automation and entertainment, physical security, digital signage and mobility
products — has generated new customer segments for our traditional IT products. Our fee-for-service Ingram
Micro Logistics business, which serves clients both inside and outside the IT industry, also has expanded our
customer set. In addition, we believe that building expertise and programs for specific vertical markets brings
new customers, while increasing penetration of our current customer base.
In most cases we conduct business with our customers under our general terms and conditions, without
minimum purchase requirements. We also have resale contracts with our reseller customers that are terminable at
will after a reasonable notice period and have no minimum purchase requirements. In addition, we have specific
agreements in place with certain manufacturers and resellers in which we provide supply chain management
services such as order management, technical support, call center services, logistics management, configuration
management, and procurement management services. These agreements generally may be terminated by either
party without cause following reasonable notice. The service offerings we provide to our customers are discussed
further below under “Services.” Our business is not substantially dependent on any of these distribution or supply
chain services contracts. No single customer accounted for more than 10% of our total revenue in fiscal 2011.
Sales and Marketing
We employ sales representatives worldwide, both in the field and on our campuses, who assist resellers with
product specifications and solution design, system configuration, new product/service introductions, pricing, and
availability. In addition, our sales representatives regularly introduce our reseller partners to new technologies
and markets in order to assist them in expanding their business.
Our product management and marketing groups help create demand for our suppliers’ products and services,
enable the launch of new products, and facilitate customer contact. Our marketing programs are tailored to meet
specific supplier and reseller customer needs. These needs are met through a wide offering of services by our
in-house marketing organizations, including advertising, direct mail campaigns, market research, on-line
marketing, retail programs, sales promotions, training, solutions marketing, and assistance with trade shows and
other events. We also create and utilize specialized channel marketing communities to deliver focused resources
and business building support to solution providers.
Products
We distribute and market hundreds of thousands of technology products worldwide from the industry’s
premier computer hardware suppliers, networking equipment suppliers, software publishers, and other suppliers
of computer peripherals, CE, AIDC/POS, physical security and mobility hardware worldwide. Based on publicly
available information, we believe we offer the largest breadth of products in the IT industry. Product assortments
vary by market, and the suppliers’ relative contribution to our sales also varies from country to country. Although
our revenue mix by product category on a worldwide basis has remained relatively stable over the past several
years, we have seen a slight shift in favor of systems over peripherals more recently, as an improved economic
environment in some areas has driven a system refresh cycle and personal mobile devices, including tablets, have
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