BACKTRACKING 12 MONTHS: Don't believe the hype

BACKTRACKING 12 MONTHS: Don't believe the hype

A week may be a long time in politics, but a whole year would appear to be an absolute eternity in the IT distribution channel. The corresponding issue of ARN from 12 months ago (January 26, 2000 issue) makes interesting reading and clearly demonstrates how quickly business outlook and grand plans can change in this game.

Prominent on page 1 was a story about now-defunct but then-listed Edge Technology spin-off eisa. It was defending its dream of selling Internet-bundled PCs and talking up the vast sums it was going to make by pioneering such a market.

The news hook was a round of sackings at the ISP, which had gone public on the back of significant revenue forecasts from Internet-bundled PCs. The rest is history. eisa's slide continued through the first half of the year as a series of attempts to find a buyer fell flat and eventually the stock stopped trading with investors having done their dough.

Its parent company also went down in a screaming heap last year, leaving creditors in the lurch and many a reseller short of warranty support for hardware.

We also broke a story exactly 12 months ago about Dataflow's auction site being off line. The software distributor claimed all was well and that it was merely a technical difficulty with the hardware and applications running the site.

The benefit of hindsight allows us to see that the auction phenomenon was little more than marketing hot air in the Australian market and that Dataflow's problems were deeper than mere IT infrastructure issues.

Several of the auction high flyers prior to April's stock crash have disappeared or retreated from the stage since then. Meanwhile, the coffin makers were already measuring up Dataflow as the distributor lurched from one crisis to the next before having an administrator appointed a few months later.

The third story on page 1 saw an ebullient channel player adding to the e-commerce hype. John O'Meara of IT Facilitators was declaring that B2B and online procurement were enabling him to get out of the margin-less abyss into which IT hardware reselling was sliding.

At least he got that half right. Resellers' margins on commodity products have become a joke in the 12 months since January 2000 and the writing is on the wall for many who persist in pursuing such a model.

However, the rise of e-procurement - so hyped by so many just a year ago - has yet to really tickle the channel's fancy. Several businesses focused purely on delivering on its efficiency and cost promises and have since packed up and gone home.

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