Although some of the major suppliers were given a few day's notice that Tech Pacific was buying and closing Merisel, most only found out after the event. While many products were distributed by both companies, Merisel had a number of brands not carried by TechPac, and it isn't automatic that these agreements pass over.
Nick Jackson, channel manager with Novell, explained to Australian Reseller News: "Our contract was void once ownership changed by 25 per cent. Naturally TechPac and Novell are discussing the horizon, and we're looking at a number of options." Jackson explained that TechPac had bought a lot of Novell product in the Merisel purchase, but wasn't getting any more at present.
Australian Reseller News believes it is far from certain that TechPac will be able to sign up Novell, as the networker is sensitive about TechPac promoting Windows NT.
A number of other vendors contacted by ARN asked not to be named, but said they were unsure of the future. One said that while his products could fit in well with TechPac's existing lineup, he didn't know if they would get the emphasis they needed. Another admitted he had put most of his eggs in the Merisel basket, and TechPac had already formed strong allegiances with his main competitors. "I'll be lucky if they do anything with my hardware, and my other distributor just doesn't reach the retail resellers."
Microsoft's Toby Gawin (director of sales and marketing - end user division) said Microsoft has been very happy with both Merisel and TechPac (two of seven distributors for Microsoft in Australia), but would use the takeover as an opportunity to re-examine the situation. "It'll take us a few weeks to draw our conclusions."
I don't believe it!
Most vendors said they were completely surprised at the buyout, though some felt it had to happen. Joe Bader, sales manager with distributor Tera, told ARN: "It was bound to happen. For those kind of players there isn't too much room. The distribution market will be getting smaller with more manufacturers going direct." He said that "prices may go up and that's long overdue as people are surviving on low margins. That will mean everyone in the channel getting a little bit more margin."
Norse's Mervyn Smythe said he was completely taken by surprise when he heard the news. But he also wonders if Tech Pacific will become more open now. "I'm always complaining that I can never find anyone to talk to me at TP. But I must admit, if I put my request on fax, they always get back to me that day." He also thinks that TechPac has caused problems for other distributors by being too liberal in granting credit accounts. "My dog has an account with TP," he quipped. "They run on cheap Hong Kong bank money, that's how they can do it."
Novell's Nick Jackson said: "The takeover wasn't hugely surprising. We weren't entirely happy with the way our relationship with Merisel was going, but we were turning it around. We had given them a commitment to move forward." He said Novell was aware that Merisel Australia had been undergoing extensive audits from the head office. "Things have been going bad over there and something had to happen."
Ken Lowe, MD Anabelle Bits, said it was general knowledge in the industry that Merisel had been struggling. "We're master distributors of Adaptec product to both companies, and we don't expect any significant change, except that perhaps things would be a bit more focused now." He believes that Tech Pacific will still be price competitive, especially as it will still be competing against smaller, State-based distributors.
Eicon's Liz Lawson said she was "flabbergasted" when she heard the news. Dicker Data's Fiona Dicker said "this will go down as the year that distributors go out of business in Australia, especially those selling software".
James Robbins, national marketing manager with CHA, believes "such a significant change in the industry will open up a plethora of opportunities for distributors that have much more of a market focus.
"This is where some of the larger distributors are lacking, they spread themselves too far and their market and product focus starts to diminish."