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Editorial: Jostling for position

Editorial: Jostling for position

The sound of distributors jostling for market position is once again deafening in the pages of ARN this week. Business as usual, it seems, is just not an option at the moment.

Multimedia Technology has openly admitted that turmoil in the distribution ranks has forced it to look for different ways of generating revenue. This has seen it make the leap into building barebones systems based on small form factor (SFF) Shuttle boxes. The SFF market is still growing and the distributor is hoping its box building initiative will eventually account for 30 per cent of its revenues. No doubt it is already helping to inflate its bottom line.

Down in South Australia, HiTech has taken one of its staple products - Acer notebooks - and worked with a small number of reseller partners to push higher value models into specific market sectors (ARN April 13 issue, page 6). Higher specifications will always mean greater margins and it looks like the vendor, distie and selected dealers alike are onto a winner with this scheme.

Bluechip Infotech, meanwhile, has decided to cut its losses and get out of New Zealand. Managing director, Johnson Hsiung, said his company had inherited the Auckland office from its merger with BBF in 2003 but had been unable to spin a profit across the Tasman because it lacked contracts with its major Australian vendor partners.

The timing is interesting given that several other local players - including Synnex, Todaytech and Altech - have all declared an interest in crossing the Tasman to generate new revenues. While Bluechip has been unable to make it work due to its particular set of circumstances, there is no reason to believe that will affect other New Zealand ventures. Hsiung has obviously decided his small operation in that country was an unnecessary drain on resources that could be better used to help grow the company's Australian business, but New Zealand resellers will surely welcome healthy competition to the very dominant Ingram.

While all of these companies have elected to make a change, Alstom was given no such luxury as Websense declared it was cutting out the middle man in favour of dealing directly with its reseller base. It is always sad to see a distributor lose a contract, especially when the decision does not seem to be based on performance. Alstom had worked with Websense for three years and invested a lot of effort in building up knowledge of its products. The decision could come back to haunt Websense if the distributor gets into bed with one of its competitors and uses that skill base to attract its resellers to jump ship. Discussions with alternate vendors are apparently already under way so watch this space.

Ingram Micro sales director, John Walters, gave us some insight into the sheer scale of the integration job still ahead following the Tech Pac merger (see ARN April 13 issue cover story). Trying to sort out buy breaks for those of its 9000 active resellers that had different levels with Tech Pac and Ingram before the merger is not a job to be envied.

This will no doubt be one of a long list of issues the merged entity has to work through. That is a no brainer. How well it fronts up to its problems and communicates its message to resellers will be the main measure of its continued success.


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