Blueprint for Business Growth in the Digital Age



	Monday 6th February 2012 Blueprint for Business Growth in the Digital Age Ingram Micro’s Senior Vice President, Gerhard Schultz delivered the keynote for the ISE conference in Amsterdam on 30th January 2012. Schultz’s compelling presentation aimed to “inspire systems integrators, live-events professionals, equipment manufacturers, distributors, consultants…indeed anyone whose business is being impacted by the transition from analogue to digital.”   Sub-titled “From Volume to Value and Beyond into Verticals”, Schulz’s Keynote explained how today’s AV and systems businesses can use their knowledge of networking technology to enhance their offering, add value for their customers, and enter new markets in the months and years ahead. In his “Blueprint for business growth in the Digital Age” address, Mr. Schulz aimed to “demonstrate how Ingram Micro, the world’s largest technology distributor, has broadened its offering to become not just a supplier of products but a valued partner to manufacturers, integrators and resellers throughout the world”. The lessons learned by Ingram Micro, Mr. Schulz argued, have an irresistible resonance for the audio-visual industry as it confronts a networked future. Mr Schultz cited Moore’s Law in terms of the ongoing development of IT products, adding that this also holds true for data capacity. The key enablers, says Schultz are miniaturisation, storage and bandwidth. Furthermore, he says, standards have enabled digital products to penetrate our world as well. The most prominent example of this is the IP protocol, which has allowed voice, image and data to transport over the same line and has allowed the industry to prosper. Energy consumption has also enabled mobile digital applications; Smartphones would not operate as they do now if major steps forward had not been made in this respect. Cost is another factor that is enabling the “digital world” when it comes to consumers replacing old products. “If we’re talking about digitalisation, we can’t prevent talking about how PCs have evolved”, said Schultz. “Main frames came about in the 1950s and 60s... and only ten years ago, the POC industry left computers to join a network of devices that all connect to the network. We have a network of ‘things’ comprised of computers and other devices that all link together.” Mr Schultz underlined the fact that there are now about 1.3 billion smart devices that can hook up to the Internet... but by 2015, that number will grow to 25-billiond devices. This is because there will be more and more machine-to-machine communication over the Internet, and many every day items will be hooked up to the Internet. Growth Metatrends 1- Ubiquity – an increasing number of networked digital products. IE physical security. a. Digital Signage – this industry has moved from a truly analogue world to a digital world, where touch screens and gesture interpretation will be commonplace; b. Healthcare – before there were many analogue products, but today everything is being replaced by digital devices. The pulse is now taken by machine and the information transmitted to the doctor via network to the doctor for virtual analysis. c. Our cars have up to 50 microprocessors using digital technology. 2- Convergence – the second metatrend to determine the future of companies working within our industry. a. The home – everyone used to have analogue devices. These are now being replaced by digital devices across the board. What is happening is that all stand alone and discreet devices are becoming networked, through two main devices: i. Smart TVs. A key development is smart, networked TVs, with apps and voice control interfaces; ii. The PC. b. In your hand – all mobile devices are converging into smart devices of various form factors. Functionality of these devices is less dependent on the hardware but more on the software; c. In the infrastructure – wireless service providers, satellite service providers, cable service providers and telephone service providers. Each is now transmitting and selling data, voice and video in a converged fashion. Even power distribution companies will begin selling these services to consumers. 3- Xaas – X stands for “anything that can be sold as a service”. With a smart device such as an iPhone, you have about a tenth of the processing capability of a PC. But many apps that can be run on a PC can be run on a mobile device, because the physical processing is not taking place in your hand, but in the remote server with which it is in contact. This means you are purchasing as a consumer, processing power and bandwidth, from various popular applets. CPU and networking capacity will be purchased over the network and based on the huge available bandwidth it is not a problem to evolve in this direction. Evolution of digital value chain Yesterday’s value chain had three stages, according to Mr Schultz. The “equipment” stage, with IP manufacturing Development and system design. Then came “Retail” – product distribution. Finally Content Providers created content for the consumers. Today’s chain is more complex, including foundry, separate component manufacturers, equipment, retail, service providers and content providers. There has been an increasing fragmentation of the hardware chain, says Schultz. What has been happening in past years is that players have been emerging that vertically integrate across the whole value chain. The first was Apple. Then came “backward integration”. Google started out being a content provider and has moved into the hardware business. We as consumers are also creating more and more content through such things as YouTube. In other words, there is a constant remodelling of the value chain. Blueprint of Ingram to take advantage of all these trends “We started by selling commodity items in volume – CE, digital imaging, network and software, systems and components”, said Schultz. “This volume division had to be complemented by such things as servers, storage, networks, virtualisation, security, data management and the cloud. That was the old model. Now we are starting to create solution areas that require infrastructure products such as ‘unified communication’. The telephone and voice world are merging with the data world. You will see the computer sending data to the phone and vice versa. A second new business area is everything that revolves around mobility. These have to be added to enterprise networks today, and this is why we created such a division. Another division is data capture / Point of Sale. This includes devices that scan products and send the data over various networks. We even recently sold a system to Scotland Yard that scans the number plates of badly parked cars and automatically sends info through the system generating parking tickets.” Mr Schultz underlined the fact that more than 60% of digital signage applications work through the network. “We started by selling beamers, then panels... but we needed to help people get access to content manufacturers. These are now a complementary part of the offering. We also realised that offering installation services was useful, and this is now being offered.” In a sentence, Mr Schultz captured Ingram’s current state: “We are a value added distributor; selling solutions into various markets.” When looking at the building blocks rather than the solutions, Ingram looked at exponential growth areas. 3 examples: - Energy – through the increased sensitivity of our populations the need for smart grids is increasing. Such things as home automation means digitalisation of products will be driven through smart grids, using intelligent meters and IT logger devices. - Applications – DS products are finding themselves in application scenarios... an example is digital whiteboards. Apple has just announced that it will support the digitalisation of content, and this will be a multi-billion dollar sector. - Health Care – Such things as X-Rays are now seeing manufacturers such as NEC that can be used for medical applications where such high resolution is needed. Ingram is moving away frombeing a commodity box-mover to adding services and moving to solution-type businesses. Today Ingram works not only through thousands of IT resellers, and hundreds of manufacturers; they have been adding AV resellers, electricians and PBX resellers, and have been helping them “move into a digital world”. “This means we not only help IT resellers, we have also helped analogue resellers – even the most conservative ones like electricians, to move into digitalisation replacing analogue products,” said Schultz. “More and more we are getting sales leads from people who refer us to projects being implemented by systems integrators, whereas before it was the integrators who would feed us leads.” “It is impossible using old competencies to keep up with the times. You need to drive solutions through new value chains. The individual components are getting cheaper and cheaper. The margin is less being generated through the hardware and more through the systems integration capabilities and through keeping up to date wit the competence profiles required”, Schultz added. Finally... Where is it all going? 1- You can be assured, says Schultz, that due to Moore’s law, every analogue app will be replaced. 2- Instant on and ubiquity of products combined with bandwidth, more and more remote “cloud” processing 3- Every device will be networked – either things or people will be identified by RFID and will be tracked by networks. 4- To maintain competencies of this digital world in order to sell solutions, you can’t be alone any more. You need to be part of a network of providers. RSS (All)


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