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Editorial: More of the same to come

Editorial: More of the same to come

If the major players could agree on one point following Ingram Micro's acquisition of Tech Pacific, it was that further industry consolidation would follow sooner rather than later. And as the first quarter of the year draws to a close, those predictions have been well and truly vindicated.

The news that eXeed has shut up shop was sad to hear. Its founder, Michael Bosnar, is a larger than life character who was never short of an opinion or shy about sharing it. He has an infectious enthusiasm for what he does and managed to build a stable of leading vendors that included Acer, Fujitsu, Fuji Xerox, Minolta, Hutchison, Emerson and, most notably, HP.

But, as was the case with Digiland before it, sources close to eXeed have suggested that it was a heavy reliance on HP business that eventually led to its downfall. When HP pulled the plug in September 2003, it left a hole that has ultimately proved too large to fill. In an ARN interview two months later, Bosnar said he had lost his taste for investment in the IT industry because the value had fallen out of it. Instead, he was promoting eXeed as a new breed of wholesaler that would concentrate on early adopter technologies where the margins were still attractive.

Central to this new direction was a relationship with Hutchison and its third generation telephony products. In April 2004, Bosnar was talking about possible deals with VoIP vendors but, for most of the year, he was strangely quiet. Now we all know why. He was unavailable to comment at the time of going to press last week and was thought to be on business in China. It's a fair bet he will be back in action before too long.

On a more upbeat note, the news that Omega Technology and Hallmark Computer International are joining forces should be good for both organisations. It is no secret that Hallmark has had a tough year and, although both parties are referring to the deal as a merger, there can be little doubt that Omega will be sitting in the driving seat.

Whenever you want to know who the top dog is in a merger, it pays to have a look at whose name goes on the manager's door. In this case, that man is Omega GM, Barry Donaghey. Hallmark boss, Edward Ho, has been retained as a management consultant but some others won't be so lucky.

Despite Donaghey's insistence that job losses will be kept to a minimum, it is a simple fact of life in business that staff cuts follow a merger - some overlap is inevitable and economy of scale is one of the most compelling reasons for striking the deal in the first place.

While there will also be some overlap in products, the new organisation must be careful to maintain the Hallmark brand, given its substantial contracts with large customers such as the Northern Territory government and the University of South Australia.

Customers can be very sensitive about takeovers or mergers and Hallmark's will seek assurances that it will be business as usual from here on in.

However this partnership pans out, you can be sure that consolidation among mid-market Australian distributors is far from over. There is no need for tarot cards or crystal balls in making that prediction.

The news that eXeed has shut up shop was sad to hear. Its founder, Michael Bosnar, is a larger than life character who was never short of an opinion or shy about sharing it. He has an infectious enthusiasm for what he does and managed to build a stable of leading vendors that included Acer, Fujitsu, Fuji Xerox, Minolta, Hutchison, Emerson and, most notably, HP.

But, as was the case with Digiland before it, sources close to eXeed have suggested that it was a heavy reliance on HP business that eventually led to its downfall. When HP pulled the plug in September 2003, it left a hole that has ultimately proved too large to fill.

In an ARN interview two months later, Bosnar said he had lost his taste for investment in the IT industry because the value had fallen out of it. Instead, he was promoting eXeed as a new breed of wholesaler that would concentrate on early adopter technologies where the margins were still attractive.

Central to this new direction was a relationship with Hutchison and its third generation telephony products. In April 2004, Bosnar was talking about possible deals with VoIP vendors but, for most of the year, he was strangely quiet. Now we all know why. He was unavailable to comment at the time of going to press last week and was thought to be on business in China. It's a fair bet he will be back in action before too long.

On a more upbeat note, the news that Omega Technology and Hallmark Computer International are joining forces should be good for both organisations. It is no secret that Hallmark has had a tough year and, although both parties are referring to the deal as a merger, there can be little doubt that Omega will be sitting in the driving seat.

Whenever you want to know who the top dog is in a merger, it pays to have a look at whose name goes on the manager's door. In this case, that man is Omega GM, Barry Donaghey. Hallmark boss, Edward Ho, has been retained as a management consultant but some others won't be so lucky.

Despite Donaghey's insistence that job losses will be kept to a minimum, it is a simple fact of life in business that staff cuts follow a merger - some overlap is inevitable and economy of scale is one of the most compelling reasons for striking the deal in the first place.

While there will also be some overlap in products, the new organisation must be careful to maintain the Hallmark brand, given its substantial contracts with large customers such as the Northern Territory government and the University of South Australia.

Customers can be very sensitive about takeovers or mergers and Hallmark's will seek assurances that it will be business as usual from here on in.

However this partnership pans out, you can be sure that consolidation among mid-market Australian distributors is far from over. There is no need for tarot cards or crystal balls in making that prediction.


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