ON Semiconductor distributors drive $1B in revenue
It may not be the traditional channel, but semiconductor distributors play a key role in boosting ON Semiconductor's sales in emerging markets; more news from the week.
By
John Moore and Spencer Smith
Published: 09 Nov 2018
ON Semiconductor, a Phoenix-based semiconductor solutions provider, is counting on distributors to generate business in emerging markets, such as the internet of things.
The company this week said it has reached a channel milestone: It hit more than $1 billion in distributor resales for a single quarter. ON Semiconductor distributors accounted for 63% of the company's third-quarter revenue. That number reflects a steadily increasing business with distributors. In 2017, distributors contributed 60% of the company's revenue, while that channel drove 56% of its revenue in 2016 and 54% in 2015.
"We are very much learning into distribution," said Jeff Thomson, vice president of global distribution sales at ON Semiconductor.
Thomson said ON Semiconductor distributors provide the company with ways to attack the mass market consumer base and create demand in such areas as IoT, industrial and cloud computing.
Masatsune Yamaji, senior principal analyst at Gartner, said distributors let chipmakers outsource the support of numerous long-tail customers, such as IoT and industrial, helping them focus on the largest customers.
"There are more than 180,000 ... electronic equipment manufacturers in the world, while nearly 40% of semiconductors are sold just to 10 big companies, like Samsung and Apple," he said.
While ON Semiconductor is expanding its distributor business, the same isn't necessarily true for all chipmakers. The portion of semiconductor industry sales flowing through the distribution channel hasn't changed significantly over the past 10 years, Yamaji said.
"The share of direct sales is about 75%, and that of resale is about 25%," he said of the industry in general.
We are very much learning into distribution.
Jeff Thomsonvice president of global distribution sales at ON Semiconductor
Yamaji said he doesn't expect a sharp change in the coming five years, but noted resale's share will gradually increase over the long term due to the growth of IoT and industrial.
Semiconductor distributors operate upstream from the distribution companies through which channel partners typically buy -- companies such as Ingram Micro and Tech Data. ON Semiconductor, for example, sells power management products to hardware manufacturers that embed them in their offerings, which may eventually move through the conventional IT distribution channel.
ON Semiconductor works with 23 distribution partners, having consolidated its roster from 45 distributors. Thomson said most customers use its distribution channel to some degree.
He said 100 customers are direct, while about 500 purchase directly and from ON Semiconductor distributors. But there are "well over 100,000 other companies" where distributors provide the only channel.
Avnet, also based in Phoenix, is one of ON Semiconductor's distributors. The company sells to companies in sectors such as industrial, automotive, and aerospace and defense.
Alex Iuorio, senior vice president, supplier development at Avnet, said the company supports ON Semiconductor with fulfillment and logistics services, also noting the importance of demand creation and design cycle support in the large-scale semiconductor distribution arena.
Two years ago, Avnet sold its Technology Solutions group to Tech Data.
Teridion debuts partner program
Teridion, an internet routing platform provider based in San Francisco, has rolled out a partner program for selling its cloud-based WAN service, Teridion for Enterprise.
Teridion said the program targets value-added resellers (VARs) and master agents with established software-defined WAN practices. Program benefits include deal registration, lead sharing, a training program and marketing funds for qualifying partners.
"We really feel [the program] is an opportunity for networking and SD-WAN resellers to come in and steal the lunch of MPLS providers," said Morgan Closson, vice president of global sales at Teridion.
Closson said Teridion for Enterprise can be added to partners' current SD-WAN offerings, sold "as an adjacent as-a-service offering."
Other news
Ephesoft, an Irvine, Calif., company that provides enterprise content capture and data discovery products, unveiled its Global Partner Program. The Ephesoft program spans five partner categories: channel, global alliance, delivery, technology and OEM. Authorized Referral Level Partners, Ephesoft's entry-level partner designation, are not required to pay a program fee. Other program features include referral fees, performance-based margin expansion and deal registration. Ephesoft has 250 partners in 50 countries. Those partners will be transitioned to the new global program, according to the company.
Mphasis, an IT solutions provider, has acquired Stelligent, a Reston, Va., technology services company focusing on DevOps automation. The combined unit, Mphasis Stelligent, brings DevOps and DevSecOps offerings on Amazon Web Services.
Cloud distributor Pax8, based in Greenwood Village, Colo., unveiled alliances with five new vendors: cloud backup players Acronis and Dropsuite; security companies Ironscales and Proofpoint; and password and document management provider Passportal.
SD-WAN vendor Silver Peak, based in Santa Clara, Calif., expanded its Partner Edge program. Enhancements include new incentives, access to a lead-sharing program and revamped training, according to Silver Peak. The vendor also said it introduced new requirements for the program's membership Silver, Gold and Platinum tiers.
Rackspace said it is "doubling down" on its application services portfolio in response to a shift in customer demand. According to a Rackspace blog post, customers are seeking an application-first approach that focuses on application modernization and then moves on to infrastructure decisions. Rackspace Application Services now provides an application modernization offering. The company, based in San Antonio, said it is also bolstering its application services through acquisitions such as TriCore Solutions and RelationEdge.
Yenlo, an integration specialist based in the Netherlands, has entered a value-added reseller agreement with WSO2, an open source integration vendor.
Anexinet Corp., a provider of digital business solutions based in Blue Bell, Pa., launched a Machine Learning Kickstart Program.
Security information and event management (SIEM) vendor EventTracker revealed its integration with ConnectWise Manage professional services automation software. The integration automates the assignment and notification of security incidents found by the EventTracker SIEM within the ConnectWise Manage console, the company said. Also this week, Solupay said it integrated its payment technology platform with ConnectWise Sell and Manage.
IT management software provider Continuum integrated security vendor Webroot's SecureAnywhere DNS Protection into its Security Profile & Protect service. Continuum, based in Boston, said its users can purchase and manage SecureAnywhere DNS Protection from within its remote monitoring and management software.
Managed detection and response provider eSentire, based in Cambridge, Ont., launched two services for its partners. The company's Malicious Activity Assessment service offers continuous network monitoring to partners' customers over a 45-day period, while Rapid Assist aims to bolster incident response capabilities, eSentire said.
DH2i, a software vendor for Windows and Linux, said its new network security software, DxOdyssey, offers a channel partner play. Released this week, DxOdyssey offers software-defined perimeter security for medium and large businesses. The product intends to replace customers' virtual private network technology used for securing hybrid and multi-cloud environments, said Don Boxley, DH2i CEO. If partners "aren't currently doing anything around security, we think it is an opportunity for them to [enter] into that space now with a credible solution," he noted.
IT documentation vendor ITBoost unveiled the 3.0 version of its One IT Documentation System. The latest version features an updated user interface.
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