1. The Whys and Ways of IT Distribution Steve Raymund Chairman Emeritus Global Technology Distribution Council and Chairman and CEO Tech Data Corporation Steve Raymund Chairman Emeritus Global Technology Distribution Council and Chairman and CEO Tech Data Corporation

2. Distribution Value Proposition — Containers vs. pieces — 1000s daily — Limit exposure — Coverage and reach — Offload account management, support — Solution selling, variable cost structure — JIT delivery, Qty. 1+ — Outsource — Working capital source — Personalized services — Offload SG&A — Consolidated purchases OEMsVARs Benefits u Break bulk, ship small orders u Manage IT orders u Credit shield u Sell to 100,000+ resellers u Sales and tech support u Full assortment, one-stop shop Services

3. Evolution of IT Distribution   Direct model not sufficient to meet overall demand   75 days of supply (45 + 30 at reseller)   Focus on pick, pack and ship   Credit services key   Direct model not sufficient to meet overall demand   75 days of supply (45 + 30 at reseller)   Focus on pick, pack and ship   Credit services key   Niche market specialization begins   50 days of supply (35 +15 at reseller)   Service offering expands (end-user delivery, tech support, education, etc.)   Niche market specialization begins   50 days of supply (35 +15 at reseller)   Service offering expands (end-user delivery, tech support, education, etc.)   Streamlining the channel: Full drop- ship to end users   25 days of supply (no DOS at reseller)   E-business entanglement   Collaborative Supply Chain Management   Streamlining the channel: Full drop- ship to end users   25 days of supply (no DOS at reseller)   E-business entanglement   Collaborative Supply Chain Management

4. Direct Or Indirect? u What’s your core competency? u What are your fully loaded costs by channel? u What’s your ROI by product by channel? What Questions Are You Considering?

5. BTO vs. Proprietary u R & D u Intellectual property u Component volatility u Gross margin u SG&A u Differentiation vs. commoditization u Competitive success factors What’s it cost? ABC fully loaded Margin better on direct, costs much higher Where does direct make sense? Channel Strategy Ahead

6. BTO in Enterprise? The Direct Issues and Success Factors — JIT (Intel price strategy favors higher inventory throughput) — Higher order value = lower sales cost — End-user self service is critical — Low margins may not permit multiple participants Do you have the competencies to execute? Do you have the competencies to execute? Will additional logistics infrastructure investment generate the right ROI? It comes down to two questions….

7. Small order size = small $ per customer Small order size = small $ per customer BTO in SMB? The Direct Issues and Success Factors = HIGH... — Support costs — Marketing costs — Sales costs — One-to-one logistics costs NEEDS... — Complete product recommendations — Integration — Deployment — Support — Upgrades MULTIVENDOR solutions are best suited to... Generate MARGINS sufficient to cover costs and make PROFIT

8. Proprietary — Higher SG&A $ and higher margin $ — Maintaining channel loyalty — Focus on core competencies — Creation of intellectual property — Product differentiation — Demand creation The Direct Issues and Success Factors Where’s the Best ROI and Why? OUTSOURCE the non-core competencies Manufacturing Credit services Demand capture Transactional selling Logistics Multivendor solutions deployment

9. Where Do We Go From Here? GOALS Pricing efficiency Minimal work-in-progress Minimal inventory in channel Great demand generation, capture, solution selling, etc. GOALS Pricing efficiency Minimal work-in-progress Minimal inventory in channel Great demand generation, capture, solution selling, etc. “Virtual Single Supply-Chain Company”

10. The New Paradigm Collaborative Supply Chain Management — Requires joint commitment  Vendors, distributors and solution providers — Three critical focus areas  Procurement (more rapid time to market)  Promotion (clear consensus on what to sell)  Pricing (strengthening our mutual processes) Optimized Results Ahead

11. Taking a Lesson From Our Past u Inventory progress Vendor and distributor contacts negotiate outcome Vendor contact addresses or escalates issues Distributor alerts vendor Distributor alerts vendor PRICING becomes the challenge u Pricing process Resolution OR lost sale? Days of Supply VAR sales contact alerts internal purchasing department VAR sales contact alerts internal purchasing department Reseller alerts distributor Reseller alerts distributor

12. TOGETHER We Can Drive Unprecedented Efficiency Seamless “One-Company” Market Strategy

13. TOGETHER We Can Drive Unprecedented Efficiency Seamless “One-Company” Market Strategy

14. TOGETHER We Can Drive Unprecedented Efficiency Seamless “One-Company” Market Strategy