Editorial: Now for the hard yards

Editorial: Now for the hard yards

Now that Commander has won its battle to gain control of Volante, the really hard yards of incorporating it into the business will begin. Acquisition has become something of a Commander speciality during the past couple of years, but the size of Volante means it will be a tougher pill to swallow than previous buyouts.

Commander managing director, Adrian Coote, dampened any speculation on its plans by insisting the first move would be a three-month review of Volante operations (see page 4 of the April 19th 2006 Issue of ARN Magazine). That is understandable given that the hostile nature of its takeover has so far stopped it conducting due diligence.

But job losses seem inevitable as the process of removing elimination gets underway. A cull of middle management and administrative staff is likely to be top of the agenda but there will also be some instances of product management overlap.

According to the human resources departments, Commander has 1400 employees compared with about 900 at Volante. Inherited workers are always a major factor in any takeover, particularly in the sales department, because top reps own client relationships. People buy from people, not companies. But Volante was also attractive to Commander because it offers strength in different markets, such as government, and fits very nicely in terms of product sets. While Commander is historically a network player, Volante will improve its desktop message to the market.

How Commander handles the Ipex division of Volante will be the most fascinating aspect to watch as the integration takes shape. When Volante paid about $70 million for the local system builder a little over two years ago, it accounted for as much as 2 per cent of the Australian PC market. At the end of December 2005, IDC estimated its share at just 0.3 per cent.

This dramatic fall was largely due to the difficulty Volante had in promoting its own PC badge while acting as a major reseller of tier-one vendors like HP. It didn't do a great job of managing that balancing act, largely favouring its big brand relationships, and Commander will have to deal with the same conundrum. Ipex had become something of an embarrassing child for Volante but its new foster parent is unlikely to be as forgiving of under-performance.

With the whitebox market continuing to lose PC share hand over fist, you have to wonder about the future of Ipex. While Coote pointed out that some government contracts stipulated local build, and some businesses still preferred to buy Australian, both instances seem to be in decline. Ipex operations look likely to be rationalised and the current leaders of that division will certainly come under close scrutiny.

When the dust has settled on its Volante integration, Commander will have improved its already strong position in the local reseller market. The trend towards a smaller number of resellers increasing their combined share of the market is a dangerous one for distribution and puts further pressure on already embattled wholesalers.

These tier-one resellers have direct relationships with the major vendors and are reducing the amount of business conducted through distribution. As this handful of players continues to become more powerful, it can only increase the likelihood of consolidation in distribution.

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