US-based distributor Ingram Micro has struck an agreement with Brisbane-based Q*Soft to distribute products throughout Australia. The agreement is effective immediately.
Although few computer industry insiders are surprised by Ingram's arrival, many expected the US-based giant to purchase an Australian company as a means of establishing a foothold in the marketplace. Q*Soft is quick to point out that's not what happened.
"We've been working on an agreement for about a year, and all along the way it's been very much of a partnership. We're not being bought out by anybody," said Douglas Heath, Q*Soft's managing director.
Michael Dean, senior manager of Ingram's export division, agrees. "This is a non- equity partnership, under which both parties will benefit greatly," he said. Dean declined to reveal any financial or proprietary details of the partnership.
For now, the Ingram Micro/Q*Soft partnership will be based at Q*Soft's Brisbane headquarters. However, there are plans under way to establish bases throughout Australia. "Q*Soft owns land in Bankstown in Sydney, and we'll be up and running there within six months. We'll have a Melbourne operation on-line within a year," Heath said.
What effect will Ingram Micro's arrival have on the channel marketplace? Like a lot of things, it depends on who you ask.
Moheb Moses, general manager of Sydney-based Sourceware, told Australian Reseller News: "I don't think Ingram's arrival will have much of an effect on smaller distributors for the simple reason that the kinds of products that Ingram, Merisel and TechPac, specialise in - I'm talking about Microsoft and Lotus and Novell, that sort of thing - are not the type of niche products smaller distributors sell. There's not much direct competition there."
Bruce Lamb, managing director of Software Suppliers, also based in Sydney, agrees. "Merisel and TechPac have far more to lose than smaller, more focused distributors," he said. "Companies like Ingram and Merisel specialise in moving vast amounts of product at low margins with little else added. It's a different type of business.
"What's more likely to happen is that Merisel or TechPac will lose market share to Ingram," Sourceware's Moses said. "For example, some manufacturers may not believe that Merisel is going to be able to focus on their products. So you may see them moving away from Merisel and over to Ingram."
What does Merisel have to say about all of this? "I don't think their arrival will make for much of a change, certainly not in the short term," said Paul Jenkins, director of marketing and sales for Merisel. "And I would also hesitate to call it an 'arrival'. Q*Soft and Ingram have had a relationship for quite a while and Q*Soft has been importing their products all along."
Can the marketplace sustain a third "superdistributor" alongside Merisel and Tech Pacific? "The market is pretty full," Jenkins said. "I don't know that Australia can support another big distributor - we're only 18 million people."
"Australia's population is too small to support a lot of broad-based distributors," Moses said. "What you're likely to end up with is three distributors selling the same thing at very low margins, and nobody making any money."
Toby Gawin, director of sales and marketing for Microsoft, thinks an ideal channel marketplace is analogous to a well-run golf course. "You want enough golfers paying fees so you can keep the grounds up, but you don't want to have to stand in a queue to get to the first tee. The more distributors you've got, the more the market is going to grow. But, you can reach a point where you're overdistributed. The idea is to strike a balance."