Bay Networks has reacted quickly to Com Tech's change in business structure by appointing US-based Westcon as its new Australian value added distributor.
The appointment of Westcon, Bay's largest distributor worldwide, fills the gap created by Com Tech's decision to abandon value added distribution in favour of time and place distribution and network integration.
Bay Networks Australia area director Rob Willis said that although the introduction of Westcon locally was in Bay's long-term thinking, the changes at Com Tech accelerated the decision. "Our agreement with Com Tech didn't allow us to make these changes beforehand, so when Com Tech came to us with their request that they wanted to change their business model, we welcomed that opportunity for them to grow their business."
Com Tech will continue to distribute Bay's products, but the value-added role will be filled by Westcon. Willis said the new distributor is a natural compliment to Bay, with 45 per cent of Weston's revenue made up from Bay products.
"They are very familiar with Bay," said Willis. "Westcon are really focused on networking equipment, they are really focused on understudying that marketplace and the requirements of delivering value-add to the channel partners. So we believe there's a lot of added value in that area that we can leverage off the Westcon operations from around the world."
While Westcon will initially only distribute Bay products, worldwide it also distributes non-competing networking products from a variety of other vendors, including Eicon Technologies, Digi and US Robotics. Westcon managing director for Asia John Lounsbury says he is talking to all of them about local distribution. "Quite a few of those don't have any presence or very little presence in Australia, but the plan is to carry all those product sets pending agreements."
While the Com Tech decision may have acted as a catalyst for the appointment of Westcon, Willis says Bay had three main reasons for appointing a second distributor. These include a recent IDC report placing Bay as number one in the LAN hardware environment, and Bay's need to change to maintain that position. "We feel the best way of doing that is to have a second distribution channel that gives customers competition at that supply point." secondly, the emergence of new markets feeding off interest in the Internet and workgroup computing fuelled the decision, he said.
Also the appointment reflects a change in purchasing patterns. "The appointment of a second distributor gives us a lot more flexibility in how we address new markets and new opportunities."
Lounsbury said Westcon never sells to end users, and is intent on building strong channel relationships. "We're in the business to build partnerships with people who build networks. We're here to provide the tools and the pieces to the resellers."
Westcon operates a loyalty program in addition to Bay's own channel program based around its product lines, with rewards including cooperative training and marketing assistance, and price protection. "We are trying to be a full service provider to our resellers for all the product lines that we carry. So a reseller can come to us and get everything they need - they don't have to deal with six or seven vendors."
Lounsbury doesn't believe Westcon will encounter a great deal of conflict with Com Tech, and won't be competing on price. "We are talking to some existing Com Tech partners who for various reasons are seeking another source for product. We plan on bringing in new business for Bay Networks by going after a whole layer of resellers that really haven't been touched by the current distribution. Obviously neither Bay nor Westcon benefit if we just come in and poach from the existing distributor - there's no net gain for anybody."