Arrow Electronics will add another IT asset disposition vendor, Redemtech, to its rapidly growing portfolio. This move further consolidates the ITAD market and expands on Arrow’s strategy to be a leading global ITAD provider.
On 29 August 2012, Arrow Electronics, a $21 billion global electronic components and computing solutions provider, announced plans to acquire Redemtech, an IT asset disposition (ITAD) vendor with expected 2012 revenue of about $60 million. Subject to the customary regulatory approval process, Arrow expects the deal to close within 60 days of announcement. Financial terms of the deal were not disclosed.
Arrow’s Redemtech acquisition deal further consolidates the ITAD market, splitting it between a few major global players (including Arrow, Sims Recycling Solutions, and OEMs such as IBM, HP and Dell) and numerous smaller regional players.
With Redemtech, Arrow will have acquired all three independent (non-OEM) Leaders identified in Gartner’s November 2011 "Magic Quadrant for North America ITAD," and it has acquired a total of six major ITAD vendors since 2010. Arrow is clearly executing on its strategy to be a major global ITAD provider and to deliver services to all areas of what it calls the “electronics ecosystem.” This ecosystem includes design and production (which is Arrow’s heritage and core business), reverse logistics and end-of-life disposition.
Although this aggressive approach to acquisitions in the ITAD market presents logistic and integration challenges, we believe that in the longer term (two or more years into the future) Arrow will be a major player in global electronics disposition, specifically ITAD.
The Redemtech acquisition gives Arrow:
Significantly enhanced North American ITAD presence, given Redemtech’s five e-Stewards certified facilities, its base of more than 300 customers and its major OEM relationships
Access to Redemtech’s innovative corporate social responsibility (CSR) initiatives, Serious Good and Connect2Compete (see Gartner’s "Redemtech Rewrites the Rules on IT Equipment Donation" and "FCC's Initiative to Bridge the U.S. Digital Divide Offers CSR Opportunities" )
Challenges for this acquisition will include:
Integrating disparate IT systems to deliver a single, coordinated view of customers’ global ITAD logistics and billing (also a challenge with Arrow's other recent ITAD acquisitions).
Expanding Redemtech's U.S.-based ITAD strength into a truly global ITAD offering. Redemtech has an innovative “franchise” approach to growing its modest global presence, which we expect Arrow to build on.
While it is unclear if Arrow intends to carry the Redemtech brand forward, request a meeting to review how this acquisition's near-term management and integration/assimilation challenges (e.g., process/skills integration and logistics) may affect tactical and long-term services and pricing.
If your organization is a large, multinational one that is evaluating global ITAD solutions, consider Arrow and its growing family of ITAD offerings as a strong, viable, long-term provider.
Beware of any initial marketing hype that implies a rapid and robust global ITAD presence. Arrow’s leverage of its global infrastructure for effective ITAD use will evolve over the next 18 to 24 months.
If your organization is small or midsize one, also consider alternative ITAD vendors such as those named as Challengers, Visionaries and Niche Players in Gartner's ITAD Magic Quadrant, because pricing and account management can be problematic with very large global vendors.
Some documents may not be available as part of your current Gartner subscription.
"Magic Quadrant for North America Information Technology Asset Disposition" — Research for this 2011 Magic Quadrant revealed mostly positive customer attitudes toward Redemtech, which Gartner ranked as an industry Leader. By Rob Schafer
"FCC's Initiative to Bridge the U.S. Digital Divide Offers CSR Opportunities" — Redemtech participated in the U.S. Federal Communications Commission’s Connect to Compete initiative, which makes PCs and Internet access affordable for low-income Americans, by offering fully functional Windows 7/Office Basic 2007 laptops and desktop systems.