IBM loves you . . . for now: Resellers fear inevitable direct online impact

IBM loves you . . . for now: Resellers fear inevitable direct online impact

Despite the potential threat of direct selling, it appears IBM's Australian reseller channel has resigned itself to the vendor's decision this month to sell its entire personal computer line over the Internet.

From this Thursday, IBM's US customers will be able to view and order anything from custom-configured products to technical support directly from IBM via a new Web site.

The site, targeting small and medium-sized businesses, will also provide links to IBM business partners, allowing customers to make purchases based on pricing and configuration options.

"This marks a major shift towards delivering on customers' interests rather than just serving up what the PC vendor wants to get across," said Dave Thomas, IBM PSG's US-based senior vice president and group executive. He added that "revenue from online sales might be interesting to the industry, but not to a customer".

Not so, in the eyes of the local IBM resellers ARN contacted last week. They claimed that "Project Odyssey" is the beginning of IBM's adventurous journey into the world of direct global selling and there is every chance the model could be mirrored in Australia.

"What IBM has done in the US was predictable," asserted Tony Iannuzzelli, managing director of Sydney-based IBM reseller Vertex Technology.

"If you have manufacturers that are losing money, the obvious thing to do from a business strategy point of view is to look at other models that you know are making money - like the Dell model."

Iannuzzelli has no doubt IBM Australia will follow its US parent's example. "Because this is a proven model for making money in a decreasing margin environment, I think the way it has gone in the States is the only way it can go and exactly the same thing is going to happen in Australia.

"If IBM is to follow the same model worldwide, it would be intelligent to have business partners to at least provide a different range of professional services to complement equipment installation.

"This is because hardware itself makes up only about 10 per cent of the purchase decision; the rest relates to the cost of ownership, configuration, installation and efficiency of that installation."

Mike Shove, group general manager of IBM's largest global reseller, GE Capital Information Technology Systems (GECITS), agrees. IBM will follow its US model.

"In the long term, I expect it to happen here too," he said.

Shove claimed GECITS is well aware of the "spill-over" effect vendor initiatives tend to have in Australia. However, he did not think a direct e-commerce model is necessarily a bad thing.

"Even though IBM in certain cases will be a competitor, they will work on the deal-by-deal basis. It's a kind of co-opetition that has existed in various parts of our industry for a while and is finally moving into product space.

"It is really down to individual resellers to differentiate themselves on the different products and services they offer."

While Shove's reasoning might be far reaching, it might not be necessary, for, according to Philip Bullock, general manager of IBM PSG, Australia and New Zealand, IBM's local operation has no plans for an online direct sales service.

"IBM and most of our competitors are global companies and have global strategies, but implementation may vary from country to country," Bullock said.

"The reason we have a general manager in every country is to look at those global strategies and decide what is the best way to implement or modify those strategies in a specific marketplace.

"In Australia, we have maintained that the most effective way to sell is where business partners are involved and we intend to keep it that way."

Recognising that new sales strategies evolve over time, Bullock revealed IBM Australia and New Zealand is also working on some Web initiatives, but reassured resellers there are "no hidden surprises" in the vendor's local plans.

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