MH: Our heritage is very much logistics so we really focus around configuration and deployment services. Application deployment is starting to come through with reasonable momentum for us but, because we don't have that services offset that a lot of people in the room do, we have to be a very low-cost provider.
If there is a very big logistics model with economies of scale that work in our favour, we will use that to deliver what we hope is value to the vendor community. It is getting harder at that end of the market so we have jumped on the services bandwagon.
MB: We rely heavily on distribution, particularly Ingram Micro. Our customers order one of three boxes from a particular vendor's range and those are the customers we are looking for. We don't do build to order stuff because the generic, off the rack suit seems to work for most customers.
MH: I think it is too easy to make yourself a reseller these days. If you have been a consultant for three days it seems you can get access to the old Tech Pac [TechLink] system and that drives prices down - having access to information as a registered reseller is useless if your client has the same information. It makes it very hard to justify your margin.
We get clients asking what margin we are making and suggesting what they think is agreeable. I think it is far too open and that is a real issue in distribution. As Steve [Evans] said earlier, the market is absolutely saturated and, for the good health of the industry, it's time that was wound back
a little bit.
SE: We need to consolidate.
CM: I think if we had some indication that it [consolidation] was going to happen, it would give us all a bit more confidence to invest more.
BC: Who has to make that happen?
SE: It will be driven by the vendors but also by larger resellers who, to some degree, have the power to force change.
MH: The reseller industry in Australia doesn't have a collective voice yet but there are a number of people saying it is probably about time that we did. Otherwise, the vendors might just get what they wish for and end up in trouble. We have clients that will order 1500 PCs in a year but will place 1100 orders to get them. That's not what the vendor-direct model is about.
MB: Surely Ingram Micro has the greatest ability to do that [consolidate reseller numbers] with its control of credit. There are so many resellers out there that are making $500 on a sale when they should be clearing $5000 on a high-end product. To them, it's $500 for something that took an hour.
MH: Has anybody ever had a client tell them they have access to the Ingram site and the buy price they have struck with a reseller is that plus 3 per cent? That is an appalling state of affairs.
MB: Not only that but you can take a data feed from any distributor you like and plaster it all over the Web with a 2 or 3 per cent margin. If you run it from home, it's quite a viable little business. There are a lot of them out there. That's what I think is driving the downward pressure on pricing. The more that get online, the easier it is for them to bastardise the price.