Tech Data, Ingram, Avnet Moving Into SaaS

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 |  Includes: AVT, CRM, EDS, IM, N, TECD, TMICY
by: Joe Panettieri

At first glance, big technology distributors -- companies like Avnet (NYSE:AVT), Ingram Micro (NYSE:IM) and Tech Data (NASDAQ:TECD) -- rely too heavily on hardware sales. Far too often, it seems as if their fortunes and stock prices are tied to the health of the PC market. Fortunately, that's changing.

If you take a close look at Avnet, Ingram Micro and Tech Data, you'll find that all three distributors increasingly focus on managed services and software as a service (SaaS) -- two of the hottest areas in high-technology.

You already know the big names in managed services (companies like Electronic Data Systems (NASDAQ:EDS)) and SaaS(Salesforce.com (NYSE:CRM), NetSuite (NYSE:N)). Now it's time to take a close look at how technology distributors have quietly entered these markets.

Tech Data: A few days ago, Tech Data inked a partnership with FMAudit. The deal allows Tech Data to offer technology consultants "managed printer services."

It's a compelling move. Just like paying a cable bill or cell phone bill, businesses of all sizes can now pay a predictable monthly fee to Tech Data's partners for printer hardware, paper, ink and related services. There's no need to write a huge check for printer upgrades. Instead, this is a pay-as-you-go model that businesses find attractive.

Ingram Micro: This distributor is working with a range of companies on managed services and SaaS. For instance, a recent relationship with Trend Micro (OTCPK:TMICY) (the security software provider) should allow Ingram partners to more easily sell software subscriptions to their customers.

Avnet: This tech distribution giant just announced plans to offer hosted email to its partners. Avnet's partners, in turn, can earn a monthly fee from small businesses that want robust email and collaboration software -- without actually purchasing a bunch of server hardware and software.

Generally speaking, I've never been an investor in companies like Avnet, Ingram Micro and Tech Data. They tend to be big, mature, hardware-centric organizations. But that's changing fast. Distributors increasingly are focused on SaaS and managed services. That's a good thing for their businesses, and potentially for their investors.