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Cellnet unfazed by life without HP

Cellnet unfazed by life without HP

Distributor blames limited product access and low ROI for latest vendor split

Cellnet's managing director, Stephen Harrison, claims the ASX-listed distributor could be better off after cutting ties with HP's personal systems group (PSG).

Harrison said both sides had poured several hundreds of thousands of dollars into the relationship in recent times but had not seen an adequate return on investment. The two parties had been reviewing their relationship for the past year.

"HP was only a small percentage of our revenue - we will probably be saving money," he said. "In terms of our top line, [HP] was not substantial, but on our bottom line, it was negative.

"Our execution of the relationship with HP wasn't the best over the last couple of years."

Harrison also pointed to the vendor's siloed distribution model as another reason for the tough selling conditions. HP maintains separate distributors for its imaging and printing group (IPG) and technology solutions group (TSG) encompassing servers and storage.

"In the notebook and PC area, margins are very skinny but it was the only product area we had access to - we couldn't subsidise with other product areas such as servers," Harrison said.

HP announced yesterday that it will cut ties with Cellnet from December 1. The vendor will retain Dicker Data and Ingram Micro as PSG distributors. It also sells notebooks and mobility products through Synnex.

Despite losing a major IT vendor, Harrison reiterated Cellnet's commitment to staying in IT distribution.

"By no means are we cutting back on the IT side - we're in it for the long haul," he said. "The issue is about balance. We previously had balance across the telco and IT sides of the business before. We lost kilter with that and we want to bring that back. Then we will see more ROI."

But Harrison said it had thought long and hard about the impact losing HP would have on its SMB push.

"We did consider HP in regards to our SMB focus - the attach rate we saw on the HP side didn't really affect our sales. We also have Acer, Asus and Lenovo in there as well," he said. "HP does have good market share and it probably does help, but once again, we have to be about giving shareholders a good return on their investment."

Harrison said the plan was to focus more on existing vendors, but he didn't rule out bringing on complementary vendors or peripherals. Cellnet is also open to working with HP in the future.

"At the moment, we need to concentrate on getting back to basics," he said. "This is not a divorce - the door is open with HP. If there was an opportunity in 12 months or two years in another area of HP then we would consider it."


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