IT infrastructures are a huge and marvelous creation of technology meeting human creativity in order to form innovation and bring ease to our lives. You are reading this because you are interested in IT or are an IT professional yourself. Whether you are handling hardware yourself or managing a team, you have a tough job. The whole process is itself a difficult one, from managing vendors to the final deployment; pitfalls and problems are inevitable.
From our experiences as an international supply chain and logistics organization over the last 10 years, we have worked very closely with high-end technology enterprises, helping them move their IT and high-end tech goods across the globe. We view the past challenges as milestones and have enabled us to manage projects more efficiently and effectively.
IT Industry
This industry is massive and estimated to be valued at over 1T+ per year. Data is considered the Oil of the Modern Age, and every company needs this data desperately. With data being so important, the management of data is the key. This sector is extremely complicated and every company is dependent on it in one way or another.
The below revenue figures are an example of some of the major tech hardware and software companies. This includes manufacturers/OEM’s, distributors, resellers/VAR’s and DCO’s. The below illustration shows very clearly the impact that established OEM’s have on the market.
For decades general buyers have believed that the IT supply chain, power dynamics, and its corresponding business relationships are very complex and complicated. A further explanation of this ecosystem will be explored below.
OEM/Manufacturers
Original Equipment Manufacturers hold almost 90% of the market share because they produce the technology and the corresponding software needed. As shown in the chart above Cisco leads the way with revenue of 49.8B, a market capitalization of 241B, and a profit margin of 21.3%.
Distributors
These companies are key financial supporters of OEMs and VAR’s. there is a common misconception that distributors are expert logistical organizations and manage the global supply chain of major OEMs and VAR’s. As you can see in the chart, Arrow stands on total revenue of 28.67B, a market capitalization of 8.18B, but barely getting by with a profit margin of only 2%.
VARs
Value-added resellers, sell and manage accounts for OEM’s. For that, they also have a tough time being profitable. Insight has total revenue of 8.34B, a market capitalization of 3.64B, and also a tiny profit margin of 2%.
Data Centers Organizations
These companies are known as the real estate of the IT industry, where they build and operate high-value data centers. These companies earn a bit more in this industry. Equinix for example earns revenue of 5.69B, a market capitalization of 71.91B, and a profit of around 6.2%.
According to AGOL worldwide other companies are not key players in the market, yet they are selling products and providing services on behalf of vendors such as Cloud and Edge, MSPs, LaaS firms, and integrators.
In this article we have gone through this vast landscape to have a bird’s eye view, still, this is just the tip of the iceberg and there is a lot more to be discussed in coming blogs. In our next blog, we will take a deeper dive into OEMs and understand how they operate and where they stand in this current market.
