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.
According to Beyhaut, Eaton’s newly enlarged sales, marketing, and support organization will have more resources to offer partners as well. “That was kind of the number one thing that we got back from the partners is we’re finally going to be able to scale nationwide,” he says. “If you look at our inside sales organization as an example, we’re going to be five to six people deep, if not more, in terms of the coverage per region. Before, it was really spotty.”
John Medaska, executive vice president of Trifecta Networks, a solution provider in Oldsmar, Fla., is excited by what all of that could ultimately mean for both Eaton and its partners. “If they really bring everything together, it’s going to be a game changer against their competition,” he says.
For all the progress Eaton’s made in the last year, however, bringing everything together remains a work in progress. The company is about 13 months into a post-acquisition onboarding process expected to take 24 to 30 months. In particular, it’s still sorting through how best to reconcile the most significant area in which its UPS offerings and Tripp Lite’s collide—mid-range units between 1500 and 3000 VA.
“We both have significant market share there,” notes Glen Haeflinger, senior vice president and general manager of Eaton’s distributed IT, critical power, and digital infrastructure division. “We have to be really careful in terms of the branding strategy and the go to market.”
Plans for the rest of the combined UPS lineup, he continues, are now fully in place. Everything north of 3000 VA will continue to carry the Eaton brand. Products below 1500 VA will be labeled “Tripp Lite by Eaton” for the next several years before eventually being re-named “the Eaton Tripp Lite Series”. Both monikers, Haeflinger notes, are designed to capitalize on Tripp Lite’s significant name recognition in the power market.
All of Tripp Lite’s products will eventually be available to members of Eaton’s PowerAdvantage partner program, beginning with UPS, PDU, rack, cooling, and related devices. That milestone, which could arrive as soon as July when Eaton expects to complete migrating Tripp Lite onto its ERP system, can’t come too soon for Shelley Deane, senior technology consultant at JEM Tech Group, an integrator based in Clinton Township, Mich.
“I’d like to have one portal to handle everything, and I’d like to see that happen pretty quick,” she says.
She and other PowerAdvantage partners will have longer to wait before they can handle sales of Tripp Lite accessories through the portal. “We are currently evaluating how to add all of the connectivity portfolio and the peripherals from Tripp Lite to the program,” says Tardy, noting that such products are typically too inexpensive to lend themselves easily to Eaton’s deal registration process.
According to Madeska, how successful the Tripp Lite acquisition ultimately ends up being will hinge at least partially on how swiftly Tardy and his peers resolve issues like that.
“It’s really on the execution side,” he says. “It has to be a seen as one company, and hopefully they’re bringing the companies together very quickly and not delaying that over a long period of time.”
