LG will drastically reduce the number of distributors carrying its notebook range, according to sources familiar with the company's plans. While a dozen have access to the product line at the moment, it is understood this will be cut to four - Bluechip Infotech and Dicker Data nationally, with Edsys operating in WA and Leader Computer Systems in SA.
The vendor, which issued a statement denying any immediate plans to alter its distribution structure, has come under pressure recently to make the change. Several distributors have expressed concerns that it was difficult to represent the brand properly alongside so many other players. The increasingly competitive nature of the notebook market has exacerbated the situation.
"We have been telling them for some time that if they don't sort out the channel, there is not much we can do," Bluechip managing director, Johnson Hsiung, said.
"LG needs some time to do the preparations but I understand the new arrangements will come into effect in September. It will help them to be more effective in the market."
Dicker Data boss, David Dicker, said LG initially indicated it would cut national distribution numbers back to five, which had prompted him to ask what level of sales would be required to secure exclusive rights to the
notebooks. But despite the vendor's reluctance to take that path, the new arrangement would boost revenues and help Dicker to diversify its portfolio. "The target of 1500 notebooks a month is high but will bring in about an extra $30 million a year," he said.
Dicker revenues reached $126 million in the financial year to June 30 but the distributor is targeting $150 million this time around.
Those that lose the right to distribute LG notebooks - thought to be Altech, Todaytech, Synnex, BCN, Espco, Galas, Express Online and Omega - are expected to retain access to other products including optical drives and monitors.
Altech general manager of sales and marketing, Safa Joumaa, said he was unaware of the decision but it was not a shock.
"It should have a smaller number of distributors that are able to sell the notebooks effectively," he said. "Everybody is fighting for the same market by undercutting each other to get the sale."
Express Online general manager, Alison McQuarrie, said she had heard LG was reviewing its notebook distributors but had not been provided with any details yet.
Bluechip's Hsiung said it was becoming increasingly difficult for smaller, regional distributors to play in the notebook market.
But Edsys general manager, Greg McDougall, disagreed.
"There is a trend to reduce national distribution but state-based disties still have a place in Western and Southern Australia," he said. "LG has fantastic products but the channel is a bit overcrowded and we would be delighted to see a reduction in the numbers."