Round Table: The future of the PC reseller

MH: I have definitely seen programs in disties where they have been able to regulate it.

SE: I personally think it's a great thing for a distributor [not to take orders below $1000] because if the transaction cost is any lower, it will kill any margin.

MB: If they put in a sweeping comment saying anybody not spending $50,000 per year will be cut, it wouldn't be hard for the top distributors like ED, Dicker and Ingram to enforce that without any problems whatsoever. But it only takes one of them to use it as an opportunity to service the needs of those small resellers and the whole thing falls apart.

BC: What does the commoditisation of the notebook market mean for the PC channel?

MB: HP, Lenovo, Acer and so on are collectively sending out millions of brochures every month and it seems there are $1000 notebooks everywhere you look. When you see that amount of printed material going out, the marketplace is aware of what's going on. You used to be able to sell against an item but it's getting harder because the high-end specifications are starting to creep down to a critical price point. Why would you sell a three-year warranty when you can just toss it out and get a new one?

SE: The corporate environment wants consistency. They want to know that what they install this month is what they can install next month and the month after. I think a lot of those consumer products vary depending on the price of chips.

MB: But those lines are getting a little blurred too. I would prefer a consumer product on my desk rather than some of the corporate products if we are just comparing pure grunt.

DA: That's what you want from a personal point of view but an IT manager doesn't. He wants to be able to lock it down as much as he can. He wants a desktop to have the same image in 12 months as it did when he bought it. They are the things that excite an IT manager.

MB: We have a very small number of customers with 500 seats and above so we have to understand what makes them tick as well. But we have a lot more customers that are now 20-100 seats and they are motivated very differently to the bigger guys.

When you start seeing that direct mail stuff flooding the market, those customers are so price sensitive that a movement of 2 per cent in either direction is enough to swing a buying decision. Australia is a country made up of small businesses, not high-end enterprise customers.

MH: When a vendor decides that a product is going end of life, you will sometimes see a model you have been selling into corporate at $1400 on a flyer for $900. That is a massive problem and it is poorly regulated by the vendors. It shouldn't happen. You have done the right thing by the client and the right thing by the vendor only for the vendor to unwittingly get rid of its problem but ruin relationships with its resellers that have taken years to build.

MB: We are guilty of doing that and would use it as a door-opener all the time. We don't engineer it that way but the opportunity is there to take the stock and the margins aren't as thin as you think. We can normally clear the stock in a few days.

MH: There's no issue with running something down but it shouldn't necessarily be the same models. If the vendors are really promoting consistency then they should remain on the shelf.

SE: I think some of the larger resellers can influence buying decisions. If we get burnt by one [vendor] partner then we can move that business to another.