ARN, in conjunction with Lenovo, invited a select band of resellers with different business models to discuss the major issues in our industry today.
Brian Corrigan, ARN (BC): What are the main challenges facing resellers today in the PC industry?
David Abouhaidar, Klikon Solutions (DA): The biggest challenge is staff - you are always either under- or over-resourced. Another would be resellers that come in looking to buy business instead of selling a solution.
Steve Evans, Commander (SE): I think the market has become quite saturated. If you go back a few years, there were a limited number of resellers that could add their own special value but now the vendors have appointed so many resellers that it is very hard to protect your margins. At the top end of the market we have vendors that are partners but also competitors as they look to take business direct. We are increasingly seeing that from one or two of our vendor partners.
Marcus Heron, Corporate Express (MH): There is a broad perception now that the reseller community won't have the ability to deliver the value it was required to many years before Dell came in and changed the world. The perception is that going direct will save you money and the resellers are the only ones promoting the reseller model. Some of the vendors derive 70-80 per cent of their business through a reseller model but only promote themselves rather than the partnership. That is a major hurdle; having to redraw your value proposition every single time you walk into a client's office.
Chris McKay, Classic Blue (CM): We would find it very hard to justify selling just PCs today. We lead with other solutions or platforms and drag PCs into the deal. We suffer from all the things the other guys have said here so far. The margins have eroded so far that it is very difficult to justify salaries for staff or to support service level expectations. Customers have no loyalty and will go wherever they can find the best price regardless of relationships.
SE: Is that true across the industry?
CM: No, but it is in this [PC] space. I don't think it's true with midrange, services or mainframe but I do find customers don't have loyalty when it comes to these types of boxes. There needs to be other value-add and people who are doing that will survive.
MH: In the mid- or top-end of town, you are sitting with a professional procurement person day in, day out. These guys will analyse the crap out of every bid you put forward and break it down to a level where they can drive the margins out of every single deal. To say it is highly commoditised would be an understatement in the PC space.
CM: You need to be making a minimum margin to stabilise or grow. If you are not doing that, then there is no point staying in the business. We have seen IBM move this product out and I think that is a big signal for everyone.