Sponsored By

What HNA Group Acquiring Ingram Micro Means for Odin, Cloud Business

The Chinese market is huge. Does this deal open doors for Ingram partners?

Channel Partners

March 21, 2016

4 Min Read

Aruba.IT's Francesco CetraroJust months after the announcement of Ingram Micro’s acquisition of cloud software provider Odin made the headlines, the Irvine, California-based company is again in the news for the plan of being itself acquired by the large Chinese conglomerate HNA Group.

HNA’s move certainly fits in the recent trend of Chinese companies “shopping” abroad, acquiring big names in the tech space. While the current turbulence around the yuan and volatility of the Chinese internal market have certainly played a role in creating this trend, it is quite clear that cash-rich Chinese companies are also genuinely interested in acquiring technologies that they can leverage with their own products and in growing in new markets, such as North America and Europe. The proposed acquisition of Norwegian browser maker Opera by a group of Chinese companies for $1.2 billion is another example of this growing trend.

When Ingram Micro acquired Odin, it was clear that the move was dictated by the growing awareness by Ingram’s management of the strategic importance that the company’s cloud division is gaining, and its potential to become an important driver of revenue over the coming years. From that perspective, acquiring the maker of the software that underpins that product was a smart move. It provided not only better control over the road map of that software, but also the opportunity to build new connections and revenue streams beyond those of Ingram’s own reseller network.

The signals coming from Ingram Micro at that point were clear: This is a sector in which the company wants to invest and grow.

HNA’s interest is probably still mainly focused on Ingram Micro’s traditional core distribution business. However, this acquisition clearly generates a number of interesting questions on the future of Ingram Micro’s (and Odin’s) cloud business, and its ability to leverage this new connection to expand in the booming Chinese hosting and cloud market.

Becoming part of HNA Group clearly provides Ingram Micro with an amazing opportunity to really leverage the Odin investment to grow in Asia, and particularly in the Chinese market, which historically has proven to be a very tough nut to crack for outsiders.

With more than 1 billion inhabitants and a booming number of Internet users looking for smart online services on which to spend their increasing amounts of disposable income, it’s no surprise that the number of foreign companies trying to enter the Chinese market is constantly on the rise. However, many of these firms quickly discover that breaking into that market is a much more difficult proposition than they ever anticipated. Beyond the obvious differences in culture and ways of conducting business, many foreigners find themselves buried under the weight of the infamous Chinese bureaucracy, with regulations and requirements that change constantly.

Being owned by a major local conglomerate is bound to open many doors for Ingram Micro and Odin, so it will be interesting to watch how this acquisition will affect their priorities and strategies, and if a new focus on China emerges in the short term.

According to a recent report by Forrester, the size of the public cloud market in China is set to more than double by 2020 from the current level of $1.8 billion. This growth is anticipated to come from the booming traffic generated by mobile apps as well as a general push from small and midsize businesses looking at increasing their margins by switching to more cost-effective cloud services.

While the Chinese cloud market is currently dominated by Alibaba’s Aliyun, Amazon and Microsoft, the expected growth is bound to draw attention from new players interested in getting a piece of the action. Many will now look with new interest at Odin’s software as an excellent way of getting their cloud offerings up and running quickly.

At the same time, it is natural to assume that quite a few existing Odin customers are feeling nervous about the recent changes and will want reassurance that their businesses will not be impacted negatively. Ingram Micro must strike a balance between eagerness to prepare for future opportunities and the need to preserve existing business connections.

Ingram has already put forth a strong effort in framing its acquisition of Odin as a positive opportunity for all involved. In theory, the fact that Ingram Micro is being taken off Wall Street should allow it to get a bit more room to breathe, spend more resources on R&D and do some long-term planning. Going private has worked out pretty well for Dell so far.

It is, however, going to be very interesting to watch how well Ingram can act on those promises — and ultimately build a better product that will benefit both existing customers and its own effort to conquer the Chinese market.

Born and raised in Rome, Francesco Cetraro currently lives in Malmö, Sweden, and is head of registry operations for .cloud at Aruba.it. He has held this position since April 2015; prior to that, he was the director of business development for Afilias. With over 10 years of experience in the domain and hosting industry, Cetraro is an expert on domain names and the hosting market.

Read more about:

Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like