Will the second tier survive consolidation?

Will the second tier survive consolidation?

Those in the traditional product procurement space were particularly affected by industry consolidation and the need to secure more volume because of ongoing margin pressures, Datacom CEO, Michael Browne, said.

"Over the last five years, a number of resellers have been bought, acquired themselves or gone out of business. It's no different to the past trends in this market," he said. "But what we are now seeing is vendors diversifying their relationships by strengthening ties with other integrators in the market. At Datacom, we have three vendors talking to us who wouldn't have 2-3 years ago and that reflects our Australasian focus."

While agreeing integrators had to continually differentiate, Southern Cross Computer Systems (SCCS) managing director, Mark Kalmus, does not see any need to be represented in all geographies.

"I think the question of geography is overrated. We have national accounts, but with the technology we have available these days we do most of this work from any location," he said. "For the traditional hardware support guy on the ground, geography does have some validity....but outside the hardware space for things like software development and services work it's less of an issue.

"We actually set up [state] offices five years ago and didn't get any value out of it."

Kalmus has no acquisition plans over the next 12 months but said if SCCS did start looking it would seek organizations with complementary value rather than territorial coverage.

"Being big is not always beautiful. There are many smaller players that survive very well," he said.

"I think we will always have smaller resellers. I don't subscribe to the theory that we'll have a set number of players. There will be people that identify an opportunity in the market and a capability where they can play [and] a place for players with services and expertise who also sell product."

Data#3 managing director, John Grant, said any tier-two players that did not have a defined space to operate in or had not aligned to an application or industry were at risk now and in the future.

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