Ferntech has sold its Advance PC business to Arche Technologies and, in what may be an industry first, swapped premises with Arche. Arche has also taken over Advance PC assembly and warranty support.
"I'm not making money on the deal," says Ferntech managing director Alex Davidson. "My main concern was to have the Advance PC customer warranties and support taken care of. I want to stay in this industry for a few more years so I don't want it to look like I've just walked away from my obligations like some other companies have done."
Davidson says Ferntech's new premises have seven months left on the lease but he hasn't decided whether the company will stay beyond that.
He says the cost of running a PC assembly business was too much in the current market. "We weren't getting the volume. We were getting 100 or so orders a month and you really need up to 500 a month for economies of scale," Davidson says.
Selling off the PC business now puts Ferntech in a better position with PC company customers, which used to view Ferntech as a competitor but which may now direct more business Ferntech's way.
Davidson says it was just luck Arche wanted to buy the PC business and that if he was looking for a buyer now, it would be difficult. "The computer market right now is tough with some companies selling at cost or below cost and big players trying to taken an even bigger share of the market," he said.
Davidson is also embarking on a joint venture in Australia with Singapore-based Intresource whose founder, KS Chay, is a former founding partner of Creative Technology.
Davidson hopes to launch Intresource's Australian branch at the Sydney PC Expo in early March. He says Chay's ambition is to make Intresource a major Asia-Pacific distributor.
Ferntech's distribution of Creative is also in doubt. Davidson says it isn't because of his involvement with Intresource but because Creative chose to appoint a second distributor, Insite Technology, in New Zealand.
"Having two distributors in the New Zealand market is not viable. Everybody is losing money except Creative; it's ridiculous."