Ingram Micro Inc., the biggest technology products distributor, has expanded its software business with a handful of deals designed to boost profits amid a projected uptick in corporate spending.
Santa Ana-based Ingram has bought four small companies in the past year in a bid to be a bigger player in software distribution, which involves selling and managing licenses, installation and customer support.
“We want to be the most relevant distributor with both our customers and the manufacturers of software products—that’s our goal,” said Ria Carlson, who, as senior vice president of strategy, scouts deals for Ingram.
The company made two software acquisitions in July.
Ingram bought Hong Kong’s Asiasoft Hong Kong Ltd. for undisclosed terms. Asiasoft distributes licenses for business software that does virtualization, security, system and desktop management, networking and business planning.
Asiasoft also provides training, consulting and support services.
Ingram also picked up Spain’s Albora Soluciones SL, a provider of business software based in Barcelona.
Albora Soluciones deals in what’s known as middleware, or software that links different applications on a network.
The recent deals come after buys in 2009.
In November, Ingram bought parts of Computacenter Distribution Ltd., a unit of Computacenter PLC, Britain’s largest reseller of technology products used by corporations.
Computacenter Distribution specializes in distributing servers, storage and related software and services.
Last year Ingram also bought two New Zealand distributors, including Vantex Technology Distribution Ltd., which does software for inventory, tracking, delivery fleets and warehouse management.
Roughly 15% to 20% of Ingram’s more than $30 billion in yearly sales is from software.
Profits
The software push is part of Ingram’s strategy to eke out more profits in a low-margin business. As a distributor that sells products to other resellers, Ingram nets pennies on the dollar.
Margins get more breathing room when the product isn’t a tangible one—like a software license.
But only a little bit, according to Carlson.
“You still need to pay your people and have working capital,” she said. “Although we are not moving a physical product from one place to another, there is still an infrastructure you need to pay for. So it’s not pure profit, but software in general has slightly higher margins than some hardware.”
Ingram also provides services for its customers, primarily technology consultants known as value-added resellers.
The company helps with marketing, credit and sales support for software that’s distributed via downloads or sold at stores.
“If you are a reseller, you need multiple software titles and brands for your customers,” Carlson said. “We aggregate from all of the software manufacturers.”
Ingram is looking to be a bigger player in enterprise software, used by large corporations to manage networks, data centers, compliance and security.
Enterprise software is the fastest growing part of the overall software market, according to Carlson. It’s seen as picking up steam this year amid a broader recovery of technology spending, she said.
“A lot of these acquisitions aren’t just pure play software,” she said. “They are based on a strategy of gaining more expertise in the enterprise computing market. We are trying to expand our expertise in large data systems and how certain products interconnect with others.”
Software Focus
A focus is software that manages and protects data centers, which are growing as companies collect more files, photos, videos and transaction data.
“Data centers are gaining steam and we have to be ahead of that curve,” Carlson said.
Another big growth area for Ingram is cloud computing software, which allows companies to run hefty programs on outsourced servers, freeing up space and cutting data center costs.
Ingram’s software ambitions are playing out against a backdrop of steadily improving corporate spending on computers, software and telecommunications gear.
Worldwide software spending is seen growing 3% this year to $229 billion, according to projections from Stamford, Conn.-based market researcher Gartner Inc.
“We’re seeing small and midsize businesses and larger enterprises invest more heavily in networking, storage and other IT infrastructure to support current and future growth,” said Tim Curran, who heads Florida’s Global Technology Distribution Council, a trade group that tracks technology distributors. “The range of solutions and services provided by IT distributors is also increasingly diversified, including a growing number of products that would have sold exclusively through other channels in the past.”
Ingram, for its part, expects to continue scouting for software acquisitions, according to Carlson.
“We look at about a few dozen targets every year, but we choose just a handful of those,” she said..
