Array Interview Update: Lead Times, Capacity & Prices in Flux

In early 2026, the IT industry continues to face potential headwinds from multiple macroeconomic factors, including the rapid price increases of IT product components, particularly memory and storage components.

However, Eric Nowak, President of Global Enterprise Computing Solutions at Arrow Electronics, said during a discussion about distribution business in an interview with CRN that the impact of these macroeconomic factors is actually not as significant as many people imagine.

Arrow Electronics reported full-year 2025 revenue of $30.853 billion, representing a 10% year-over-year increase. Global components sales achieved full-year revenue of $21.501 billion (accounting for approximately 69.7% of full-year revenue), up 8% year-over-year, while ECS (Enterprise Computing Solutions) achieved full-year revenue of $9.352 billion (accounting for approximately 30.3% of full-year revenue), representing an 18% year-over-year increase.

Nowak said: "If you're investing and you're in the right place at the right time, a 2% or 3% fluctuation in the economy is nothing compared to over 20% growth in cloud computing or other areas. IT growth is so much stronger than the macroeconomic downturn, so it has no material impact on us."

Even so, Nowak noted that the impact of the current memory and storage shortages remains unavoidable.

He said: "Our suppliers are basically telling us that it's becoming increasingly difficult to maintain lead times and ensure products can be manufactured. We also have our internal manufacturing business, AIS (Arrow Intelligent Solutions). Yes, we have already seen the shortages in SSDs and memory. So, ultimately, we need to ensure we are smarter than our competitors, make the right judgments, and place orders at the right time."

Nowak recently spoke with CRN at the Global Technology Distribution Council (GTDC) Summit in Oceanside, California. During the interview, he also provided an update on the company's search for a new CEO following the departure of former CEO Sean Kerins last year.

Here is more from CRN's conversation with Nowak.

Question: Looking at the impact of macroeconomic issues on the distribution industry, what are the main observations for you and Arrow right now?

I would still give my usual answer. In this still relatively immature IT world, if you are doing the right things, the macroeconomic situation is actually not that important. If you are investing and you're in a sweet spot, a 2% or 3% fluctuation in the economy is nothing compared to over 20% growth in cloud computing or other areas. IT industry growth is so much stronger than the macroeconomic downturn that it makes almost no difference.

That said, of course, for traditional IT businesses, it is true that some countries in Europe are currently struggling. But frankly, at Arrow, we haven't really felt that. Again, we are in areas of the business that are growing regardless of the environment. So, essentially, if the economy is good, people invest; if the economy is bad, people also invest to drive efficiency and productivity.

Everyone understands that they need to shift to cloud and AI, so they are investing heavily. And before they do that, they also understand they need to ensure the infrastructure is ready first, so they have to keep investing. So, it doesn't make a big difference for us.

Question: Let's look at it from a different angle. How are these factors impacting your customers? I ask because we're currently facing a major issue—the memory shortage.

That's a different story. We haven't really seen a significant impact yet. We operate in the enterprise market; we don't sell PCs or those small devices. Seventy-five percent of our business comes from cloud services and software, with hardware accounting for 25%. While that's not an insignificant portion, overall, we are still primarily focused on the enterprise space. We deal in storage and so on, so it's completely different from broadline distribution.

Therefore, we haven't really felt the impact yet, but our suppliers are basically telling us that it's becoming increasingly difficult to maintain lead times and ensure products can be manufactured. We also have our internal manufacturing business, AIS (Arrow Intelligent Solutions). Yes, we have already seen the shortages in SSDs and memory. So, ultimately, we need to ensure we are smarter than our competitors, make the right judgments, and place orders at the right time. But it's definitely tough, absolutely.

Question: Manufacturers are telling partners that 30-day order validity periods are no longer possible.

That's absolutely correct. Delivery timing and production capacity have been impacted, and so have prices. There's no doubt about it—the quotes we give now are valid for one week, not one month. Quote validity and pricing are highly correlated.

Question: How does this shortened quote validity period affect your AIS business?

We have to compete with everyone to secure supply. And right now, we have absolutely no certainty. So, when we go to place orders for hard drives or memory, the suppliers don't give us firm delivery dates. They just do their best, and we accept the goods whenever they arrive.

We are placing a lot of orders well in advance now, and we also see customers placing orders early because they understand that lead times will be longer than expected. They also understand that as the year progresses, the situation is very likely to get worse. So proportionally, we are seeing more hardware orders than software orders right now. Basically, everyone has to place orders for both sides, but they start with hardware first, hoping for shorter delivery times.

Question: Do you proactively contact partners to remind them to place orders early?

No. Everyone in the industry is very clear that there is currently a shortage issue, starting with SSDs and now expanding to memory.

Question: What about hard drives? Western Digital is telling customers that their production capacity for hard drives for this year and next year is already sold out.

Yes, some of our suppliers have already filled their supply quotas for this year.

Question: You mentioned earlier that 75% of your business is in cloud services and software. Are tariffs, shortages, or price increases causing channel partners to shift some of their business from hardware to more cloud and software?

Of course, it's tough. But as long as running software requires hardware, they have to procure a certain amount of hardware. You could say they have the option to move some of their business to the cloud, and they are indeed doing that. That's why our cloud business has been growing over 30% year after year for many years, and it continues to grow now.

So, there is definitely some migration happening, but the market demand for more hardware and more storage still exists. The development of cloud and AI itself comes with hardware requirements. The current cloud transformation is in a hybrid cloud model, so it still requires a certain amount of hardware. As for AI, you need to重构 your infrastructure; not everything will go to the cloud. Therefore, we are seeing good growth in the infrastructure business, driven by hybrid cloud models and AI.

Question: Have you seen any opposite trends, such as workloads repatriating from the cloud back to on-premises?

No. There might be isolated cases. But essentially, we are a distributor, and our primary market is the midmarket—small to medium-sized businesses—not those large enterprises. So, maybe one or two large customers have decided to move some workloads back from the cloud to on-premises, but that's probably happening mainly with large enterprises. I'm not aware of the scale of that trend. But midmarket companies are not turning back.

Question: What are the biggest issues your channel partner customers are currently facing? And what is Arrow doing to help alleviate these issues?

For traditional partners, the biggest issue they face is how to complete the transition to the cloud. Ultimately, they have to completely change their business model, change the way they work, and change the way they collaborate with their customers.

What we are doing is primarily centered around a platform. We provide a platform that enables every partner to accomplish what they need to do in managing subscriptions in the cloud, including deployment, management, orchestration, and so on. These partners cannot develop such a platform themselves, they can't achieve scale, and they certainly can't connect directly with 10 or 15 vendors. They need solutions to complement what they sell to their customers. Customers want complete solutions.

Therefore, we also integrate some managed services into the platform, which partners can utilize to supplement their own services. That is to say, we are helping them build their own solutions in the cloud. The platform itself is AI-enabled; the key lies in scale. We can do this because there are thousands of partners on the platform; they can't do it because they don't have that scale.

Question: Do you still see partners resistant to this transition?

Some partners might choose to continue focusing on the infrastructure business. Because again, not everything will move to the cloud, so there will still be people who need to install security equipment, networking equipment, compute, and storage. So there are still some partners who continue to focus on the areas they know well, namely infrastructure and on-premises...

But in the midmarket, nobody is buying a whole new set of solutions for on-premises deployment anymore, so they have to move to the cloud.

Question: One last question. What's the latest update on the search for a new CEO to succeed Sean Kerins?

We are still in the middle of this process. We are interviewing candidates, screening candidates. There's no definitive timeline right now, but the process is moving forward.