Ingram Micro Inc.’s latest push into services: watching blinking lights 24 hours a day.
The Santa Ana-based company, best known for distributing computer products and consumer electronics, is pushing a new group of services designed to help monitor corporate networks.
The move is aimed at helping Ingram’s customers—technology service companies and stores known as value-added resellers—offer more to their corporate clients.
Ingram is looking to help resellers take on work monitoring corporate networks around the clock, looking for any signs of trouble.
They’ll be able to do so by tapping Ingram’s network operating center in Hyderabad, India, where it has some 60 workers.
“The big problem with it is that you are essentially deploying high-priced engineers to sit there and watch blinking lights,” said Justin Crotty, vice president of services for Ingram Micro North America. “We can, for much cheaper, watch those blinking lights and remotely remediate problems when they come up.”
By piggybacking on Ingram—the county’s largest company with expected sales of $27 billion this year—resellers can offer a service that otherwise might be out of their reach.
“It allows our customers to outsource the low-end maintenance to Ingram and leave the high-priced technical folks and the engineers to go out and work with customers,” Crotty said. “It’s a model to deliver high quality services using a lower cost labor model.”
Ingram Micro sells to nearly 200,000 resellers around the world. They range in size from big chain stores to small tech consultants.
So far, about 100 of Ingram’s customers have signed up for the monitoring service, Crotty said.
“Since May it’s been our top-selling offering,” he said. “Our customers like that it’s a fully integrated, labor-based network operating center that they can then layer on to their own services.”
The effort is part of Ingram’s ongoing push into services, which promises better profits for the company and can boost its bread-and-butter distribution business, which gets the slimmest of profits.
Ingram’s hunt for profits includes taking on marketing, server and software hosting, handling of warranties and returns, software licensing and financing, among other offerings for customers.
The network monitoring services also hold the prospect of boosting Ingram’s distribution business.
As part of the monitoring, the company uses software to figure out where its resellers can pitch their own customers on more products.
Those products, in turn, are ordered and delivered by Ingram.
The push comes at a critical time for Ingram.
In the second quarter, the company saw sales fall 2% from the first quarter and 25% from a year earlier to $6.6 billion.
Slumping sales “had a negative impact on profitability in the quarter and remains our top challenge,” Chief Executive Greg Spierkel said in a call with analysts.
Profits shrank 57% to $25 million in the quarter from a year earlier.
Ingram’s shares are up about 20% since the start of the year on a recent market value of around $3 billion. But the current quarter still looks tough.
“As we look ahead we see the economic downdraft abating, but no significant rebound in sight,” Spierkel told analysts.
The third quarter typically is weaker for Ingram Micro as orders slow during Europe’s summer vacation months.
Analysts, on average, are looking for third-quarter profits of $33 million on sales of $6.6 million, down 20% from a year earlier.
The managed services division has seen some growth despite a big cost cutting and layoffs in other parts of the company.
Some 1,200 resellers have signed up for Ingram’s managed services since the division was formed in late 2006, Crotty said.
“We were not affected, in fact, we added resources,” he said. “We have actually grown our business through the downturn. It’s been a bright spot for the company over the past few years.”
