Ingram Micro Heats Up Global ITAD With CloudBlue Acquisition

G00258534

Analyst(s):

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Summary

Ingram Micro’s acquisition of U.S. IT asset disposition vendor CloudBlue adds another large electronics-related company to the competitive global ITAD market, promising multinational companies more competition and options.

News Analysis

Event

On 30 September 2013, Ingram Micro, a wholesale technology distributor and supply chain services and logistics provider with annual revenue of $40 billion, announced that it has acquired Georgia-based CloudBlue Technologies, an IT asset disposition (ITAD) vendor with about 1,000 mostly U.S.-based customers. CloudBlue will retain its branding and operate as a wholly owned subsidiary of Ingram Micro. Financial terms of the deal were not disclosed.

Analysis

This deal is Ingram Micro’s first major step into the ITAD market and is designed to jump-start its presence there. Gartner believes the acquisition of CloudBlue — which Gartner named a Visionary in our "Magic Quadrant for North American IT Asset Disposition," published in November 2011 — is part of a long-term strategy to provide global, end-to-end life cycle management of IT assets and consumer electronics. This will ultimately result in Ingram Micro becoming a competitive global ITAD player.

The strategy behind this deal differs from Arrow Electronics’ six-company ITAD acquisition spree from 2010 to 2012. We believe Ingram Micro will focus on a rapid, 12- to 18-month international expansion by converting a strategic subset of its more than 130 global facilities into e-Steward-certified ITAD facilities. Ingram Micro's 200,000 global customers and CloudBlue’s customers will offer a substantial ready-made cross-selling opportunity for these global ITAD facilities.

Global ITAD vendors typically have extensive global partner networks, but we believe Ingram Micro’s long-term strategy is to develop a global network of facilities it owns and operates itself. Ingram Micro will likely leverage CloudBlue’s existing ITAD processes and global tracking system and portal, and use partners to fill interim gaps and service remote, lower-demand geographies. By year-end 2014, we believe Ingram Micro/CloudBlue will have the beginnings of a credible physical facility presence in Europe and Asia-Pacific region that complements its existing robust North American presence.

Challenges for this acquisition include:

  • Near-term pressure on CloudBlue’s management and resources to support Ingram Micro’s aggressive move into global ITAD

  • Maintaining service levels in CloudBlue’s core U.S. base while shifting resources to an aggressive global expansion plan

  • Extending CloudBlue’s U.S. track record of rapid three-month facility conversions internationally in the face of a wide variety of local regulations

Recommendations

Current CloudBlue customers:

  • Monitor service levels for any potential degradation, as much of CloudBlue’s management and resources will likely be refocused on its new rapid international expansion.

Prospective ITAD customers:

  • Determine whether you can effectively deploy a centralized global ITAD solution. Factor in the potential for internal local resistance against centrally dictated ITAD processes and vendors, especially if ITAD funding remains a local obligation.

  • If you are a large, multinational organization evaluating a global ITAD solution, consider Ingram Micro/CloudBlue, with the understanding that through 2014, CloudBlue’s existing partners will largely handle non-U.S. business.

  • If you are a small or midsize organization, consider alternative local ITAD vendors; however, be aware that working with large global vendors can make lower-volume pricing and account management problematic.

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© 2013 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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