Is there life after Microsoft for Q*Soft? The distributor's new management believes it is locking down a strategy that gives the company a fighting chance of survival. But the road ahead remains rocky.
Q*Soft, one of the PC industry's distribution success stories in the mid-90s, suffered a heavy blow five months ago when its right to distribute Microsoft products was terminated.
That one stroke cost Q*Soft half its revenue stream and a large chunk of its credibility.
Making a dicey situation even more delicate, Microsoft's axe fell when Q*Soft was in the middle of a managerial and ownership transition as well as suffering fallout from a too-rapid business expansion.
For incoming managing director Barry Amor, it all added up to a massive business migraine. But the former head of Australasian Memory appears to have a knack for finding headache relief.
His fightback strategy for Q*Soft revolves around finding ways to plug the revenue hole left by Microsoft while cutting costs and improving customer service.
Specifically, Amor has:
Shifted Q*Soft's centre of gravity from an over- reliance on software by broadening its range of hardware offeringsWooed second-tier suppliers who offer more generous gross margins than first tier playersPared staff and recentralised Q*Soft's administrative structureFostered a more self-reliant company culture in place of the Microsoft-centric mindset that once characterised Q*SoftAlthough Microsoft helped plunge Q*Soft into crisis, the Redmond colossus has also tossed it a lifeline. Far from initiating litigation to recover monies owed by Q*Soft, despite rumours circulated by ARN (ARN, Feb 18, p3), Microsoft has chosen to treat the debt in a very generous manner, according to Amor. "Following the termination of our agreement, Microsoft has been very reasonable and supportive in ensuring the financial stability of Q*Soft," he said.
Microsoft's departure made one other supplier "nervous" said Amor. "But others have taken us on . . . we are more attractive to them because we don't do Microsoft so they know their products will get mind-share from us," he said.
Heading the list of software suppliers who in the past few months have signed Q*Soft as national distributor for a full range of products are Corel and Seagate Software.
In the hardware arena, Q*Soft has just con-cluded a pact with Acer and will continue to distribute Compaq products plus Canon, Epson and Lexmark printers, Amor says.
In the past three months, Q*Soft's survival tactics have seen it diversify into components from lesser known players, including motherboards (Micronix), memory (Dataram, Datrontech and Southland Microsystems), 3D graphics cards (Righteous), CD towers and notebook hard drives (Procomm), and networking products (D-Link).
"We are bringing in second-tier suppliers who want to grow their business and are willing to give us a healthy margin," said Amor. "They understand a distributor has to have good margins if he is going to put some market effort into their product."
Storage, interconnectivity and the Internet are growth areas where Q*Soft is seeking a stronger presence.
Since Microsoft's departure, Q*Soft's reseller base has actually gained in numbers, according to Amor. It has 10,000 on its database of which it actively markets to 6000. However, its reseller base has shifted from mainstream dealers towards a new set that addresses the small-to-medium business market rather than the top 100 list.
The company has also radically revamped its organisational philosophy by abandoning the expansionist decentralisation strategy that saw it maintaining sales and administration staff plus warehouse facilities in the major capitals.
Administration has been centralised in Q*Soft's Brisbane headquarters and only sales staff now occupy its offices in Sydney, Melbourne and Perth. Warehousing is outsourced in each of those centres in a way that is transparent to customers, Amor says.
He admitted Microsoft's departure had been traumatic for Q*Soft's staff and forced a culture change on the organisation.
"With Microsoft, you don't sell, you just take orders. Now we are a sales organisation. The group still with us have changed the way they do business."
Q*Soft's Web site (www.qsoft.com.au) is another key area where changes have been rung in. It has been redesigned by an in-house programmer and the new streamlined version is on track to implement online order entry in March, Amor says.
"One of our challenges is to get people who were disappointed in our old site to revisit our new one. We think they will be pleasantly surprised."