Digiland Australia goes back to the future

Digiland Australia goes back to the future

Floundering hardware distributor, Digiland International, has taken the first steps towards resurrecting its local presence, announcing plans to become a niche operation.

After months of industry speculation about its future, the company has reappointed its Australian founder, Laurie Carmichael, to head up the company's renewed attack on the local market.

Carmichael said the distributor had abandoned its high volume, low margin business model in favour of becoming a specialist player.

"Today, those [broad-based] winners have been decided," he said. "Players aiming at the big end of the market are clearly defined."

Instead, Digiland would now be concentrating its efforts on emerging sectors, such as the digital home and Internet appliance market, where margins were more significant, he said.

"Some vendors have multiple distributors that are struggling to make the dollar," Carmichael said. "Then it comes down to price.

"We will have unique relationships overseas to get good margins across our products."

Carmichael described the difference between its former margins and the new projected points as differing "by a magnitude". However, he admitted annual sales projections for the first 12 months would be in the vicinity of $10-12 million - a far cry from the $120 million sales figures recorded in the past.

Another key difference for the revamped company would be its switch to imported products, rather than sourcing local hardware, Carmichael said.

"We had 12 vendors previously, and a few will continue as they offer complementary products," he said. "The bulk of our products, however, will be from overseas - these will be what give us long-term business sustainability."

Although it was too early to decide which of its local vendors it would retain, Carmichael said there were plenty of opportunities to provide supplementary hardware, such as servers, LAN cards and switches.

"We don't require a lot of vendors - we'd be looking at between six and 10," he said. "Our reseller base will be an accumulation of that. We don't need to have thousands, we will have hundreds."

Digiland's range of Internet appliances for the SMB market would also require specialist knowledge and ongoing services support from resellers, Carmichael said.

Resellers would also be pivotal in providing services, he said.

To aid partners in fulfilling services opportunities from the forthcoming range of products, Digiland will roll out new reseller training programs in March.

These would be provided through newly recruited staff from the distributor's services subsidiary, Infonet Systems, in Singapore, Carmichael said.

The company was also now in the process of hiring staff for its local operations, he said.

In line with its shift to a niche model, Digiland has now closed all of its existing branches across the country except for Melbourne and Sydney. These included premises in every state.

Carmichael said he was still undecided on the fate of its Sydney office.

The distributor will also be relocating its head office in Melbourne to smaller premises in February.

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