Ingram Micro Inc., which grew to become Orange County’s largest revenue producer—not to mention the world’s largest wholesale technology distributor—by shipping software and other tech products to a network of nearly 300,000 resellers—is once again adapting its business model to thrive in the digital age, while potentially boosting the likelihood of another sale of the Irvine-based firm later this year.
A partnership with MassChallenge Inc., a Boston-based startup accelerator, will culminate next month with the first annual Comet Competition.
The Ingram-sponsored event aims to “identify and support the most promising B2B technology startups in the world,” according to the company.
The event kicked off in November and it encourages independent software vendors to build an IT channel to allow commercialization of their technology, according to Ingram, which along with MassChallenge is ponying up $1.5 million in cash and go-to-market funding to the winners of the event.
Ingram is particularly interested in those that make cybersecurity, infrastructure management, middleware, manufacturing tech, retail tech, Internet of Things and financial tech applications. It said it won’t take an ownership position in the winners.
The final of the Comet Competition will be held on March 11 to 13 at the 2019 Ingram Micro Cloud Summit in San Diego.
The event underscores Ingram’s efforts to discover startups and their emerging technologies and bring them to its growing, online global marketplace.
“That’s where we’re going,” Nimesh Davé, executive vice president of Ingram’s global cloud business, told the Business Journal last week.
“We will be the place where new technology gets realized in every market across the globe.”
Ingram’s standing as the world’s largest cloud service aggregator and distributor—a business line the company’s invested nearly half a billion dollars in over the past seven years or so—adds some legitimacy to Davé’s prediction.
So does its long-standing reseller partnerships with some of the world’s largest tech firms, including Microsoft Corp. (Nasdaq: MSFT), Amazon.com Inc. (Nasdaq: AMZN), DropBox Inc. (Nasdaq: DBX) and Docusign Inc. (Nasdaq: DOCU).
Monie Moves
Ingram’s rise to the top of the cloud charts has been fueled by big investments backed by Chief Executive Alain Monie, who took the top post in 2012 with a mission to boost productivity; grow sales and margins for high-volume business lines; expand higher-margin specialty businesses; and continue investments in innovation.
Check off those line items, and add another for good measure: positioning the company—once again—as a takeover target.
The Wall Street Journal and Reuters in December reported that Apollo Global Management LLC, an alternative investment manager with $270 billion in assets under management, has been in talks to buy Ingram, the Irvine-based unit of Chinese conglomerate HNA Group Co.
Apollo’s initial offer was too low, the WSJ said, citing unidentified people familiar with the matter.
HNA is reportedly seeking $7.5 billion, including the assumption of $1.5 billion in debt.
There’s been no reports of negotiations continuing since the initial offer was made, or of other suitors for Ingram, which employs about 900 people in Orange County.
HNA, which is trying to raise cash to pay off debt, paid $6 billion for Ingram Micro in 2016.
Cloud Growth
Ingram Micro investments into its cloud platform appear to be paying off; that business now generates more than $1 billion in annual revenue.
The business line hosts and manages an e-commerce platform and web store for more than 45,000 value-added resellers and managed service providers, according to the company’s website.
Though it’s Ingram Micro’s fastest-growing business line, the cloud business only represents a small fraction of the company’s annual sales, which top $46 billion.
Last year, in a move that pushed it further away from its distribution and core IT roots, it launched an independent software division, CloudBlue, to help customers build, scale and monetize cloud and digital services.
The software product, which included the integration of six acquisitions and more than four years of development at its Irvine headquarters, provides companies a mechanism to build a cloud business, or any subscription-based business, and their own marketplace, while automating back-end work, such as billing, provisioning, and monitoring.
“That takes us completely outside of IT,” Monie told the Business Journal last year. “The retailer can sell anything.”
The e-commerce engine has become the preferred product for the likes of T-Mobile US Inc. (Nasdaq: TMUS) and Telstra Corp., Australia’s largest telecom.
CloudBlue essentially powers Ingram Micro Cloud, a business which largely relies on a customer base of value-added resellers, primarily technology consultants that sell goods and services to small and midsize businesses.
“We’ve built a leadership position in digital marketplaces,” Davé said.
The company’s overarching goal of the Comet Competition and the partnership with MassChallenge—a nonprofit network of startup accelerators that don’t take equity positions in companies—is to proliferate its digital marketplace with breakthrough applications.
More than 300 contestants from Boston, Tel Aviv and Austin were initially evaluated on several criteria, including vision, industry impact, and potential in the channel.
Regional winners and a global champion will be announced at the company’s cloud summit next month.
