People who get IT, shop for it at CDW. The company offers 100,000-plus information technology products, including notebook and desktop computers, software, printers, servers, storage devices, networking tools, and accessories. under more than 1,000 brands. Top brands include Adobe, Apple, Cisco, Hewlett-Packard, Microsoft, and VMware, among others. Half of its sales come from private businesses and half from public-sector clients. CDW was founded in 1984 by Michael Krasny as Computer Discount Warehouse.
CDW operates two business segments: Corporate (50% of sales) and Public (50% of sales).
The Corporate segment divides its attention between medium and large organizations (100+ employees) and small businesses (up to 100 employees).
The Public segment encompasses government agencies and education and healthcare institutions in the US.
On a product basis, CDW generates some 20% of sales from notebooks and mobile devices; 15% from Netcomm (internet and network ) products; under 10% each from desktops, enterprise, and data storage products; and over 15% from software; as well as under 30% from other hardware and 4% from services. Services include customized engineering, hosting, and data center services.
While CDW's primary focus is the US, it has additional operations in Canada and the UK -- the latter primarily subsequent to CDW's acquisition of Kelway TopCo in 2015.
Its distribution centers are in Illinois, Nevada, and Warwickshire in the UK. It has data centers in Wisconsin, Minnesota, and the UK. It serves customers in more than 80 countries.
Sales and Marketing
The company serves upwards of a combined 250,000 government entities and education and healthcare customers and small, medium, and large business customers. It has its own sales force and service delivery teams.
CDW markets via online, broadcast, print, social, and other media channels. The company targets decision makers, influencers, and the general public through news releases, case studies, media interviews, and speaking opportunities to support these promotional efforts.
As well as products from major tech firms like Adobe, HP, Apple, and Dell (to name just four), CDW also deals in products from up-and-coming tech firms such as Bit9, Cradlepoint, Nutanix, Splunk, and Veeam.
Sales of HP and Cisco products account for over a quarter of total sales.
CDW's customers have been buying a lot of IT equipment and services sending the company's revenues and profits higher over the past several years, driven by consistent high-single or double-digit annual growth in its medium/large business channel.
In fiscal 2016 (ended December), revenue grew a nice round $1.0 billion to $14.0 billion -- an 8% rise. Growth mostly came from the public segment, with strong gains recorded in education, government, and, to a lesser extent, healthcare. Sales to the private sector grew more modestly: Small Business revenue was up 5% but Medium/Large businesses growth was flat. Growth drivers were an increase in demand for infrastructure improvements and a heightened focus on IT security. The first full year contribution from CDW UK revenue accounted for over half of the year's revenue growth.
Net income climbed 5% to $424.4 million due to higher revenue, offset by a $98 million gain on the remeasurement of CDW's pre-existing 35% stake in the acquired CDW UK in the previous year.
Cash provided by operating activities increased 118% to $604 million due to higher revenue and higher accounts receivable.
CDW continued in 2017 to use its three-part growth strategy, which includes: 1) capturing market share and new customers; 2) innovating on products in high-growth areas; and 3) developing its services value-add.
On market and customer gains, CDW enhanced seller enablement tools such as its Services Recommendation Engine and launched its IT Orchestration marketing campaign to increase awareness on the importance of a joined-dots IT strategy. It also rebranded the acquired UK business as CDW UK.
New products in high-growth areas include Cloud Planning services and a new Digital Workplace practice. It also added 70 new partners.
New services include an Infratructure-as-a-Service offering, a new local services market (bringing its presence to 25 major cities in the US and UK), and new Network Security service capabilities.
Mergers and Acquisitions
In 2015, CDW acquired the remaining 65% of Kelway TopCo, a UK-based IT solutions provider with a global supply and presence in 100 markets. Kelway was rebranded as CDW UK.
CDW went public in mid-2013. It was hoping to raise $500 million with its IPO but walked away with $395 million. The computer seller will use the proceeds to service debt, to conclude ties with its owners, and for general corporate services. This was its second IPO after being in private hands for six years.