Tech Data has a taste for Apple

Tech Data’s most recent results, for the fourth quarter and the fiscal year 2020, make for interesting reading. Net sales for the year were down 1% to just under $37bn ($10.38bn for Q4), GAAP net income for Q4 rose by 28% to just over $149m and full-year income was up 10% at $374.5m.

Europe contributed 56% of total worldwide sales in Q4 and 52% for the year (down from 54% in 2019). Sales in the Americas were up from 43% to 45% for the year, but static at 41% in Q4. Asia Pacific sales accounted for 3% of global sales in both periods.

Commenting on the results, CEO Rich Hume said the fourth quarter “capped a momentous year” for the distributor. “For the fiscal year 2020, we delivered a strong financial performance while making strategic progress and continuing to deliver higher value to our channel partners, colleagues and shareholders,” he said.

Hume highlighted the distributor’s forthcoming acquisition by Apollo. “We ended the year by reaching our biggest milestone yet – the agreement to be acquired by Apollo,” he said. “We look forward to completing the transaction and working with the Apollo team to accelerate investments in our business.”

In among all the figures and tables contained in the news release from Tech Data was the following sentence: “The following vendor represented 10% or more of worldwide net sales in the fourth quarter: Apple Inc 19%.” In cash terms, that’s nearly $2bn.

Is it significant that a single vendor contributed close to one-fifth of all sales for the distributor in Q4? Probably. Tech Data’s website proudly proclaims that it is “one of the world’s largest technology distributors”, adding: “We help companies like HP, Apple, Cisco, Microsoft – and hundreds of others – bring their products to market, and we offer a wide range of technical and business support services.”

The distributor describes itself as “the world’s leading end-to-end technology distributor” and boasts of selling more than 150,000 IT products from over 1,000 vendors. And yet it would appear that none of those other companies – including long-established heavyweights Microsoft, Cisco and HP – represented more than half the sales that Apple delivered for Tech Data in Q4. If they had, they would have been highlighted as representing “10% or more of worldwide net sales in the fourth quarter”.

This is a newish phenomenon. In the previous quarter, Apple was responsible for 17% of worldwide sales, with Cisco Systems making up 11% and HP Inc representing 10%. So how did Apple rise to such a prominent position in Tech Data’s vendor global sales chart? The distributor isn’t saying. Nor will it reveal which other vendors are significant contributors to its worldwide sales.

In reply to questions on both subjects, a spokesman for the company said: “At this time, our commentary on the results will be limited to what’s in the news release.”

It was only in Q3 of its fiscal 2020 that Tech Data introduced the practice of listing vendors that represented 10% or more of worldwide sales, so this is all fairly new information which, once the distributor has been acquired by Apollo, may well no longer be published.

Nevertheless, it says something about the changing nature of the technology landscape that Apple should occupy such a strong position in Tech Data’s vendor roster, above the likes of HP Inc, Microsoft and Cisco Systems. There are still plenty of people in the tech industry who disparage Apple as a “toymaker” and not a serious IT vendor, but I have a feeling Tech Data wouldn’t place itself in that cohort.