If you think Arrow Electronics is just a component distributor, think again. It is now, in the words of President and CEO Michael Long, a “lifecycle solution provider”, and right now it is proving to be pretty good at it.
Make no mistake Arrow is still in the components selling business. It is the strategic juggernaut it has built around that initial premise which is propelling the company forward.
Long was in an ebullient mood when he briefed analysts on its third quarter results in a conference call hosted by seekinglpha.com. As well he might be as he and his team had just delivered record Q3 sales, gross profit, operating income and earnings per share. Global components income rocketed 28%, and record third quarter enterprise computing solutions sales delivered $2.11bn a 9% uptick year-on-year.
“Compared to two years ago, we’re generating 21% more sales and 33% more profit. That’s not a cycle, that’s differentiated scale,” declared Long.
He pointed to several key milestones in the quarter including an expanded collaboration with wireless carriers to develop industry-specific digital transformation solutions. The plan is to take advantage of technologies like 5G, artificial intelligence, software-defined networking, and the Internet of Things.
And Arrow announced plans to open its Colorado Open Lab next year. The company is working with 19 municipalities and agencies along with private businesses, universities and research institutions that make up the Colorado Smart Cities Alliance. The lab will be used as a place to showcase ideas such as data-driven smart street lighting, smart parking, and connected automated vehicles.
It will also be a test head for suppliers establishing standards on edge computing and artificial intelligence.
There is also an initiative which sees Arrow allied with a leader in construction, civil engineering, and smart city transformation. The objective for this alliance is to accelerate the digital transformation in smart cities on a global scale. The collaboration will integrate IoT technology into the physical environment to drive improvements in asset management, worker safety, public safety and security.
Arrow will provide a library of pre-integrated technologies that can be priced into proposals and deployed as a part of contracts.
All this activity puts Arrow at the heart of a customer’s process encompassing design, product development, components supply harnessed by offerings such as software, and relevant data and can be seen as a shrewd strategy to tighten the binds between Arrow and its suppliers and customer, existing and new.
To augment this advance the components and enterprise business units working closely together. The company is working with value added resellers (VARs) and managed service providers (MSPs) to cross sell its Components Group GPU offerings with the Enterprise Solutions infrastructure and solutions.
Given software’s importance in potential applications, Arrow is aiding hardware-oriented VARs to be part of a software-led solution approach.
Said Long, “We’re excited about the growing number of cross enterprise engagements. We see these engagements as one of our biggest sources for sustaining long-term margin and returns improvement. We have triple-win opportunities from these engagements. For example, we’re working with an intelligent lighting company that is intersecting IoT and smart cities.”
First, we’re helping design and supply components for their connected control units,” he continued. “Second, we’re selling those control units through our network of system integrators and managed service providers to their enterprise and municipal customers. Third, we’re attaching the connectivity and end-of-life solutions for all those control units, and we’re the only company with capability to capture these three-pronged opportunities.”
“We’re ahead of pace to deliver a record year in 2018. We delivered a record third quarter result and expect a strong close to the year,” Long added.