Redington India : Strong Performance history, re-rating candidate

#65

This article highlights how independent retailers and distributors find it hard to make money while selling Apple products due to its stringent pricing norms that benefits Apple itself ( own stores). The pricing rules of Apple ensures minimum profit to any seller outside of Apple often making it unviable if you don’t have scale. (Redington has scale of course).

But Apple being Apple, in order to extract as much profit from the value chain can make it more and more difficult for others to sell it’s product- this is an advantage and a disadvantage for this co

+ve : Competition reduces as players exit, leading to consolidation( Apple has however continued to have only 2-distributors for India- Ingram and Redington). Apple continues to remain Apple of customers’ eyes due to premium status and market expands (Apple mkt share in India- 4.4%, Middle East - 30%)

-ve : anti-trust fines on Apple and distributors, lower margins may erode gains of volume increase

Since Apple contributing 30% revenue of Mobility segment, what are your views on this significant risk?

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#66

This is a useful article that shows how AWS Distributors work and their relationship with partners. How AWS Distributors Like Ingram Micro Cloud Are Enabling Partner Success | AWS Partner Network (APN) Blog

The good news is that any customer Redington introduces to AWS, they are always in the picture, so the revenues will be sticky. I don’t have any information on what percentage or margins a distributor gets from distributing AWS products compared to physical products that the cloud services displace. Plus I suspect some of the larger accounts would go direct to AWS and not via Redington.

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