For the next few years, distribution and logistics will remain the mainstay of the company that distributes Apple iPhones, iPads and MacBooks in India; however, the marketplace platform will begin to take shape from 2025 and later become a larger play, group chief executive officer V.S. Hariharan said.
“We’re investing a few million dollars on the platform called Cloud Quarks to make it more analytically oriented, and we’re also building a marketplace around it with multiple vendors and software, so the resellers can also work with us to gain knowledge of this for their customers. We are working on that, as against pure hardware distribution which will be supply chain logistics driven with credit, warehousing,” Hariharan said in an interview.
Under its existing model, the Chennai-based company operates vast warehouses stocking a large number of gadgets from smartphones to laptops from vendors such as Apple and Samsung, a business that’s based heavily on credit. In contrast, the marketplace platform will offer infrastructure and software as a service requiring no inventory, low warehousing and little credit, based on subscriptions and renewals that its network of 39,500 partners will take to market. It currently operates in 40 markets across the world, including Saudi Arabia which contributes $1.5 billion to the overall business.
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Hariharan said companies in the segments where it operates are undertaking digital transformation of their businesses, which are likely to include creating capacities in the cloud and investing in adopting or integrating AI within their operations. This creates a situation where they may be working with a handful of independent software providers, which is where Redington’s platform marketplace will be able to provide tailor-made solutions.
The strategy would pan out over the next few years; however, Redington will be able to ascertain the timing of the marketplace pivot in the next 12-18 months. The inflection point will come when companies see the benefits of using AI on top of cloud, and begin getting the return on investments made in the infrastructure to create the cloud.
Hariharan expects Redington’s software business to double to $2.5 billion in the next three to five years, growing at 30-40% annually. Software business, currently part of the technology solutions unit, currently makes up 10% of the Redington Group’s overall business. In the quarter ended September, the company’s revenue was ₹24,952 crore, with a profit of ₹293 crore. India, South Asia and Singapore contribute two-thirds of its overall revenue, with the rest coming from other markets.
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Distribution of smartphones and featurephones is Redington’s largest contributor to global revenues at ₹8,713 crore, followed by consumer and commercial personal computers, print and supplies at ₹8481 crore and networking, security, software, server and storage that contributes ₹6,314 crore to overall revenue. Its cloud resell and managed services business is the fastest growing at 53% on-year, but contributing only ₹972 crore to overall revenue, as per the company’s earnings presentation for the September quarter.
Redington’s single largest vendor is Apple, with a revenue contribution of 29% in the first half of FY25, followed by HP at 10%, Lenovo at 8%, and Samsung and Dell each contributing 7%. In FY24, Redington Ltd’s revenues stood at ₹89,600 crore, with a profit of ₹1200 crore.
The group already works with major hyperscalers such as Microsoft, AWS and Google, which will enable it to bring software solutions from these entities to the platform marketplace.
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To be sure, the hardware distribution and supply chain segment will remain strong as key brands and vendors introduce products with AI agents or AI features built into the hardware beginning 2025, which will be priced higher than existing models. The market is expected to see faster tech refresh cycles in the next three years on personal computers, mobile phones and servers, besides cloud solutions and new AI solutions.
Hariharan further noted that the premiumization trend in smartphones and personal computers segments is expected to continue as higher spending becomes more pervasive in regions beyond metros.
The company is integrating AI within its own processes and training its 7500 plus workforce on AI. “We are making sure that all our people are getting trained in the language of AI. All our sales and marketing people are being trained on where they are headed, being able to understand what is an LLM, Gen AI, the different technologies available,” he added.
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In order to build capacities, Redington has set up pre-sales teams in India and Middle East, and is building proofs of concept. It is also looking at multiple small-scale acquisitions in the cloud and software space as it intends to bring more capability and go-to-market competency.
Having started operations in new markets of South Africa, ASEAN countries and Central Asian countries like Azerbaijan, Kazakhstan and Georgia over the last few quarters, the company intends to replicate its software strategy that it is developing at present in these markets before looking at more mature markets of US and Europe.