Choice is a wonderful thing as a reseller, so the expected appointment of Synnex to carry HP notebooks will be welcomed by many dealers (see page 1 of ARN, October 19 edition). But the news will not be cause for celebration at the offices of its current distribution partners, Ingram Micro and Dicker Data. Both companies must be shaking their heads in frustration and wondering why vendors continually try to boost sales by increasing competition in the distribution ranks.
While Ingram already has access to HP printers, Dicker has the most to lose from the Synnex announcement because it only has access to PCs, notebooks and servers. This will put it at a disadvantage at times because dealers looking to buy printers and computers will be able to get both from Ingram or Synnex but not from Dicker. In this industry, cost is often king but convenience is an important part of dealer buying decisions. Ingram and Synnex will be able to put together bundles that Dicker has no access to and that has to hurt.
It must be even harder for both Ingram and Dicker to swallow HP's decision when you consider that both companies carry Toshiba notebooks. They have already had to grin and bear it once this year when that vendor decided to add IT Wholesale to its partner ranks back in May.
The official line from HP is that it will only appoint new distribution partners if a company demonstrates that it can grow the market. This is a decent way of doing things in theory because it reduces the risk of a new partner eating into the market of existing disties. Rumour has it that Synnex has been able to produce a list containing hundreds of dealers that are not on the customer lists of Ingram or Dicker. But, of course, the reality is that Synnex will look to eat away at the Ingram and Dicker customer bases because that is how free market competition works. As always when a new distie enters the fray, resellers stand a good chance of seeing cheaper prices. But it could be a double-edged sword because thinner margins are also a distinct possibility.
There are striking similarities between Toshiba's decision to add another distie and the current situation with HP because both had just been displaced at the top of the notebook market, according to quarterly figures from market analysts at IDC. Earlier this year, Toshiba was displaced by HP for the first time in 18 months after the latter enjoyed a stellar quarter, particularly in retail. But its reign at the top proved to be short-lived, as Acer swept to the lead in the latest count, helped significantly by becoming the first major player to break the $1000 notebook barrier.
Although both vendors would deny it vehemently, you can't help but wonder if these figures have played some role in both decisions. I guess we will never really know but the addition of Synnex is likely to see all three disties sharpening their prices in an attempt to win reseller hearts.
The other major news items this week suggest that market conditions are pretty tough at the moment. It was sad to hear that Integrity Data Systems has been forced into voluntary administration after a decade of trying to sell the wireless dream. It is a fact of business life that greater rewards carry increased risks and Integrity boss, Ross Chiswell, has been very candid in admitting that he took an expansion punt that failed to pay off.
Other distributors have also been tightening their belts with Ingram shutting its Brisbane warehouse in favour of supplying from Sydney (see page 1) and Alloys also closing its warehouse in that state (see page 16). In last week's ARN, Sato announced it had closed its office in Perth.
Ingram's decision has raised some eyebrows, particularly among its competitors, who have all been quick to suggest they will make gains from the announcement. Initial reaction from resellers has been kinder, but it does seem strange for the country's largest distributor not to have a warehouse in the state that is enjoying the fastest growing IT market. You have to believe that Ingram boss, Guy Freeland, knows what he is doing but a reseller backlash, if there was one, could see him reverse that decision and open a bigger Queensland warehouse facility further down the track.