Comms Dealer

The future ownership of Westcon-Comstor has been thrown into question following news that parent company, Datatec, has entered into a transaction which could result in the sale of the value-added distributor.

Based in South Africa, Datatec operates across three core divisions, controlling technology distribution through Westcon Group, integration and managed services through Logicalis and consulting and research through Analysys Mason.

After issuing a cautionary statement to advise shareholders of a potential acquisition deal, rumours are circulating that the $6.5bn company is preparing to sell its distribution division.

"Shareholders are advised that Datatec has entered into negotiations in relation to a transaction by the Company, which, if successfully concluded, may have a material effect on the price of the Company's shares," a Datatec statement read.

HQ'd in the US, the distributor derives 90% of its revenue from a pool of 15 global vendor partners across 60 countries, with 42% of overall sales coming through Cisco.

Unit sales of printer hardware through the channel across Western Europe continue to contract, down by -2% year-on-year in Q4 2016, mainly driven by decline in sales of laser hardware, according to data published by researcher Context.

There was a mixed pattern in individual countries: over the quarter, Spain, Germany and Italy registered a slight decline in sales of printer hardware: -2% year-on-year. Sales in Spain fell due to particularly strong performance in the same quarter last year, and a delay in investments driven by uncertainty as a result of a period with no government in place. French distributors also registered declining sales - of -9% - driven by weak performance of multifunction devices

While distributors' sales of inkjet multifunction printers (MFPs) were flat for the quarter, those of laser hardware fell by -6%: sales of laser MFPs declined by -5% and laser SFPs saw sales drop by -7% - although this is an improvement on the double-digit declines last year. The shift from mono and single-function devices to colour and multifunction continues.

"Printer hardware distribution sales contracted across all major Western European countries except the UK in Q4 2016", said Zivile Brazdziunaite, Imaging Market Analyst at Context. "Multifunction laser and inkjet devices accounted for positive performance in the Retail and Corporate Reseller channels. In the UK, a shift towards higher-end devices, with enhanced functionalities led to an average selling price increase."

The negative performance of laser hardware over the quarter affected most vendors, except for Lexmark, Kyocera and Ricoh. Distribution of low-end laser SFPs to the Retail channel accounted for increases in Lexmark and Ricoh sales of +3% and +10% respectively in Q4 2016, while Kyocera registered a strong increase in sales to the Corporate Reseller channel.

Over the quarter, HP continued to lead the market with a share of 34%, followed by Brother and Samsung with 19% and 15% respectively.

Avnet's Q2 results need careful analysis as they include the acquired Premier Farnell business in Europe and have to allow for the pending transfer of Avnet TS to Tech Data this year.

Avnet began reporting the TS business as a discontinued operation in the first quarter of fiscal 2017 and prior periods have been adjusted for comparability.

It was further complicated by changes in the embedded solutions where it says reported revenue of $4.3bn was approximately $75m below the midpoint of our guidance as a result of the decision to reclassify $92m of embedded computing solutions revenue to discontinued operations. 

The core Avnet business in Europe rose and margins increased.

Gerry Fay President of Electronics Marketing, says they saw growth in automotive and industrial automation, particularly in the German marketplace and then medical and renewable energy markets were strong for us also.

"I think if you think about gross margins, the team continues to do a very nice job of managing their business, given the realities today of supplier consolidation and things like that. So again, our European team continues to be strong and our book to bill is supporting that. So I look for continued growth out of our European region going forward."

Sweden-listed Cognosec is set to acquire A-tek Distribution, which offers cyber security solutions, products and services via digital distribution using portal technologies.

The acquisition is in line with Cognosec's strategy to expand business areas to cover the sale and distribution of software technologies over the Internet.

The deal is expected to close in Q1, 2017 subject to legal, financial and technology due diligence exercises.

UK-based A-tek Distribution was founded in 2009.

Microsoft HoloLens, the first self-contained holographic computer, is now available for preorder in Australia, France, Germany, Ireland, New Zealand and the United Kingdom, with devices starting to ship in late November.

Windows 10 will be updated in 2017 to include Windows Holographic, the platform that powers the mixed-reality experiences and bring the virtual and the physical worlds together. In June it was announced that Windows Holographic is coming to Windows 10 PCs and head-mounted displays to deliver new mixed-reality experiences.

Though Microsoft is primarily highlighting developers and commercial partners in the expansion, with the programme opened to any developer or business customer willing to pay $3000 for the device in the US and Canada back in August, a similar progression could now potentially be realised beyond North America with the news that it will be available in other areas.

"Since the launch of Microsoft HoloLens, we have seen passionate developers and world-class companies develop groundbreaking computing experiences only possible on HoloLens," said Alex Kipman, technical fellow, Microsoft Windows and Devices Group.

"When we set out to pioneer the mixed-reality category, we knew that many of the best innovations would be discovered when others got their hands on the technology. It has been quite inspiring to see what our partners have built and what individual developers have created. Together, we have only scratched the surface for what mixed reality can do. I can't wait to see what happens next as we welcome these new countries to our holographic landscape."

According to IDC, 'worldwide revenues for the augmented reality and virtual reality market will grow from $5.2 billion in 2016 to more than $162bn in 2020'.

The development opportunity is significant, it says, as all holographic apps are Universal Windows apps, and all Universal Windows apps can be made to run on the Windows Holographic platform.

This means the investments that developers of all shapes and sizes make today will take advantage of the growing ecosystem of Windows Holographic devices, says Microsoft.

Amazon Web Services has launched the AWS Europe (London) Region, joining existing regions in Ireland and Germany.

An AWS Region is a physical location in the world where AWS has multiple Availability Zones with one or more discrete data centres, each with redundant power, networking and connectivity, housed in separate facilities.

It says that over one hundred thousand UK-based customers already use existing AWS Regions and developers, startups, and enterprises, as well as government, education, and non-profit organisations, can leverage the AWS Cloud to run their applications and store their data on infrastructure in the UK

"Our customers and APN Partners asked us to build an AWS Region in the UK so they can run their mission-critical workloads and store sensitive data on AWS infrastructure locally," said Andy Jassy, CEO, AWS.

In the data centre, lab trials for software defined networking (SDN) are still dominant over production trials and live deployments, claims Cliff Grossner, senior research director and advisor, cloud and data centre research practice, IHS Markit

Service provider bare metal switching deployments have stalled, but more bare metal switches are in-use for SDN, even as Cisco and Juniper were named as the SDN vendors by respondent service providers, he says. The number of respondents in production trials and live deployment in 2016 continued to be lower than expected by those taking part in the prior year's study.

Getting to live production is taking more time than expected. This means that the most innovation-driven part of the market critical for new revenue-SDN controllers, data centre orchestration and SDN applications-is still wide open. Although the leaders in the SDN service provider data centre market are becoming clearer, especially for physical network equipment, we do not expect the market to solidify until live deployments ramp.

By 2018, bare metal Ethernet switch ports in the data centre are expected to reach 41% among operators surveyed.

VMware has pulled in Alanzo Blackstock from Cisco as Director, Partner Organisation for UK and Ireland. Blackstock will be responsible for driving strategic alliances and managing VMware's partner ecosystem.

"Alanzo has a demonstrable track record of building strong relationships with partners in the region," comments David Phull, vice president and general manager for UK&I, VMware.

Prior to his appointment, Blackstock was responsible for managing Cisco's largest partners in the UK, having worked at Cisco for over a decade.

ShoreTel's Q2 results show a lift in recurring revenue as a percentage of total revenue from 52% to 61%, reporting an annual recurring revenue run rate of $216m.

Hosted revenues of $36.7m in the second quarter of fiscal 2017 were up 20% year-over-year and 3% sequentially.

GAAP hosted gross margin for the second quarter of fiscal year 2017 was 51.8%, compared with 53.7% in the second quarter of fiscal year 2016.

Non-GAAP hosted gross margin was 55.0% in the second quarter of fiscal 2017, compared with 57.3% in the second quarter of fiscal 2016.

The total number of installed customer seats increased 26% over the second quarter of fiscal 2016 to approximately 259,000. Hosted revenue churn was 4.6% annualized in the second quarter of fiscal 2017.

As the strategic shift in revenue mix towards hosted revenue continued, second quarter of fiscal 2017 total revenue was $88m, compared to $90.4m in the second quarter of fiscal 2016 and $86.3m in the prior quarter. GAAP net loss was $2.9 million.

"Hosted revenues continue to represent the largest percentage of total revenues and product revenues were sequentially up," said Don Joos, president and CEO of ShoreTel.

"The cost actions taken earlier this fiscal year drove sequentially improved financial results and cash flow from operations. We remain focused on product innovation as we introduced a number of technology advancements including video collaboration for Connect CLOUD, the expansion of multi-tenanted Connect CLOUD in the UK and our new Teamwork application, a team collaboration tool which leverages the ShoreTel Summit technology stack."

Unify has reaffirmed its commitment to scale up the proportion of business it does through the channel to 70%, and has confirmed that the addition of 50 new UK partners last year has propelled it closer towards realising this ambition.

Barry Tuffs, Vice President for UK and Ireland Channels, has pledged to accelerate the gathering momentum during the coming year, promising potential partners a full portfolio of hybrid communications and an opportunity to join Unify's technical PreSales and Consultant Community group, an information resource known as TechConnect.

Tuffs stated: "TechConnect enables partners to engage in technical dialogue, view product feature and functionality roadmaps, share common approaches and gain direct access to Subject Matter Experts."

He also confirmed that Unify will increase its emphasis on delivering flexibility to partners via a portfolio of on-premise, cloud and hybrid solutions spanning TDM and IP technologies, backed up by a revamped approach to doing business through the channel that, for example, segments the market and provides specialised vertical-specific support.

"We've overhauled the Unify Partner Program to ensure that partners receive high-touch expert advice on specific vertical sectors, as well as marketing and implementation support," added Tuffs.

The purpose of Unify's technology is to transform how enterprise and mid-market companies communicate and collaborate, an objective that was advanced by leaps and bounds when the vendor was acquired by Atos in January last year. The combined entity soon began to leverage Unify's UC expertise in tandem with Atos' dexterity in the IT services space.

"Backed by Atos we are also continually investing in our product portfolio, which includes innovations such as Circuit and OpenScape, enhancing these solutions for partners and mid-market organisations," added Tuffs.

Having articulated Unify's coherent channel strategy, Tuffs talked-up the role of the cloud in Unify's thinking and highlighted the vendor's integrated proposition for unified communications, mobility and real-time comms.

"With cloud at the centre of our product portfolio we will continue to deliver a UCaaS experience that brings together multiple voice, video and data networks, connected devices and applications into one platform, allowing teams to collaborate securely anytime, anywhere," said Tuffs.

Also driving Unify's UK channel campaign is David Lindley, Head of Sales UK&I, who is at the vanguard of 'transforming Unify's sales teams'.

"We are moving away from a direct sales model and focusing our attention on a Channel Centric High Touch approach," he added. "This emphasis on channel-centricity will ensure that Unify and our partners continue to gain market share."