This week's merger of giant office product suppliers Office Depot and Viking Office Products created a $US9 billion revenue monster. And the implications for the Australian office supplies market are just as mouth-watering after a closer inspection of Viking's domestic performance.
Consider Viking's wholly-owned Australian subsidiary, established in Sydney in October 1993, and which last year turned over around $80 million in "office products" - stationery, consumables and, more recently, low-end fax machines and printers. Viking models the business on its US parent which prides itself on "fanatical customer service" through the distribution of catalogues and direct delivery, according to Anne Cashman, Viking's general manager.
In effect, Viking Office Products Australia has gone from being part of a $1.5 billion company to being part of a $9 billion company. It barely has its toe in the Australian water, and it clearly has a taste for the IT market. Direct selling companies generally work to a business model that can be duplicated, and office equipment companies have only just started to impact the traditional IT channel.
And what about a company such as Danka? It claims to be one of the world's largest independent suppliers of office automative solutions. It appeared on the Australian landscape in July 1996 as the result of some acquisitions. According to mid-volume product marketing manager Rick Zucchelli, digital office equipment is approaching one third of Danka's Australian turnover.
"We are definitely moving from a box moving to a solution provider operation as we migrate to more digital (IT) products," he said.
This Florida-based company has offices in Sydney, Brisbane, Melbourne, Adelaide, Perth and Auckland. With a background in business machines and a heritage of competing for business in the cauldron of the office equipment market, the IT channel will, no doubt, feel its impact more and more.
Meanwhile, there may be some IT resellers feeling more than a little nervous about multi billion-dollar companies, whether established by merger or acquisition, coming into their traditional market.