The power quality unit at Eaton Corp. is no stranger to acquisitions. Through the years, it’s executed dozens of transactions, ranging from its $11.8 billion purchase of Cooper Industries a decade ago to its $600 million purchase of Royal Power Solutions in January.
Few of those deals, however, have been as strategic for Eaton or as potentially lucrative for its partners as the one the company discussed extensively at its 2022 partner conference in Fort Lauderdale this week: the 2021 acquisition of fellow power quality leader Tripp Lite.
For one thing, that deal doubled Eaton’s share of the uninterrupted power supply (UPS) and power distribution unit (PDU) market from 12% to 24% overnight. For another, it rolled about 600 active Tripp Lite partners and some 8,000 partners total into Eaton’s already sizeable channel.
Most importantly, however, the deal added a vast catalog of cables, power cords, KVM switches, and other peripherals often bought on a one-off basis to Eaton’s already wide-ranging portfolio. Indeed, while Tripp Lite makes UPS products for general purpose endpoints, gamers, and a variety of vertical industry use cases, those systems account for only about 30% of its revenue.
“There’s almost no overlap,” says Herve Tardy, vice president of marketing and strategy for Eaton’s critical power and digital infrastructure division, of the two companies’ offerings. “We’ll be strong in the transactional business and strong in the project space.”
The implications are legion, Eaton contends, beginning with more products to offer resellers and MSPs that rarely sell power infrastructure gear. “That’s something that we’ve been struggling with for quite a long time,” Tardy says.
Partners that do sell power equipment, moreover, can expand the size and comprehensiveness of their proposals by incorporating Tripp Lite racks, enclosures, and accessories, adds Steve Loeb, Eaton’s vice president of distributed infrastructure sales.
“It allows the partner network to leverage those solutions to block out competition or expand their sale or really make themselves more ingrained with their customer base,” he says.
And make no mistake, Loeb continues, selling peripherals is profitable. “It’s very, very high margin,” he says.
Partners can collect those margins well after the initial sale too through “land and expand” cross selling, notes Graciano Beyhaut, Eaton’s commercial integration leader. “That’s what Tripp Lite does such a good job of,” he says.
Significantly, Beyhaut and others emphasize, the Tripp Lite catalog arms partners who land in the data center to expand into totally new areas. In addition to traditional power products, for example, the company makes cables and other offerings for pro AV solutions, a booming market now that businesses are re-tooling recently re-opened offices for hybrid workforces.
“Everybody’s investing in new videoconferencing systems and new types of meeting rooms that require a lot of connectivity,” observes Tardy, who calls fulfilling that need a “massive opportunity.”
The Tripp Lite deal will benefit channel pros in other ways, Eaton insists, such as lightening vendor management burdens for partners who previously bought power products and accessories from separate vendors. “They can just work with one manufacturer now because we have all of that in one package,” Loeb says.