IT wholesaler Ingram Micro will distribute IBM products to small and medium-size resellers in Central America and the Caribbean, ending an exclusive arrangement under which GBM Corp. had distributed IBM goods for the past decade, mostly to large companies.
The decision should benefit end users because it should make IBM products more widely available in Central America and the Caribbean, analysts and executives said. GBM expects to benefit by selling additional services to IBM clients served by Ingram, while Ingram, IBM and resellers stand to gain by increasing their respective sales, analysts and executives said.
IBM didn't make the decision as a way to end GBM's distributor exclusivity, but Big Blue does acknowledge that it was looking for a way to increase its sales in Central America and the Caribbean, said Rick Mathey, territory manager for IBM's personal computer products division in Central America and the Caribbean. Ingram is well suited to accomplish this, thanks to its extensive reseller network in Central America and the Caribbean and to its good track record of selling IBM products in the rest of Latin America, Mathey said.
After seeing that IBM had authorized Ingram Micro to sell its products in the rest of Latin America it decided to open the deal to Ingram, Mathey said. GBM realized it had limitations when it came to reaching growing small and medium-size resellers in that region, he said.
These small and medium-size resellers play a huge role in IBM's sales because of their close relationship with end users and their coverage of cities that GBM hadn't been able to reach after a decade of exclusivity for IBM products, Mathey said.
"Ingram Micro counts with a strong and wide reseller's network and all the logistics to support them with products and financial aid, which include an accessible credit line, which (the resellers) could not access from GBM, due to this company's strategy," which focused on large resellers, Mathey said.
GBM has good coverage of the telecommunication, manufacturing, government, energy and banking sectors, but is weak among the small and medium-size businesses, said Emerson Gibin, IDC senior research analyst for emerging markets in Latin America, based in Sao Paulo. IDC is a division of International Date Group Inc., parent company of IDG News Service.
GBM's focus on the corporate market has possibly cost IBM a leading position in the PC and server markets for small and medium-size businesses, Gibin added. Compaq Computer Corp. and Dell Computer Corp. lead the PC market for small and medium-size companies and home offices and IBM wants to take market share away from them, he said.
According to IDC figures, IBM leads in sales of PCs to large companies in Central America and the Caribbean, Gibin said. But Compaq is still the leader in PC sales in the region for the small office/home office and for small and medium-size businesses, followed in both markets by Dell. IBM is looking forward to grabbing market share from them, Gibin added.
Ingram Micro will provide financial and sales support in IBM products to the group of small and medium-size resellers it has worked with for more than 10 years in all seven Central American countries, the Dominican Republic and Haiti, Ingram Micro said in a statement released after the deal was closed two weeks ago.
Ingram Micro will be able to sell IBM's PC product line, including Thinkpad notebooks and NetVista desktop PCs, as well as the Intel Corp.-based xSeries servers, plus other IBM personal computing products, such as handheld PCs, monitors and disk drives, said Norman Huszar, director of sales for Ingram Micro Latin America. And now Ingram Micro will also be able to sell IBM products to GBM, Huszar said.
A source familiar with the deal said the list of products available to Ingram could widen, depending on IBM's strategy and on how resellers commit to this first agreement.
"GBM sees Ingram Micro as an alternative channel to its large (enterprise) accounts ... They have not had the focus on medium and small accounts, as Ingram Micro has," Huszar said, adding that Ingram Micro has been able to offer a credit line to its small and medium accounts, which GBM has never included in its strategy.
Reached for comment, GBM spokeswoman Marielos Molina repeatedly declined to elaborate on the deal, saying the company wouldn't comment beyond what was mentioned in the press release.
"I think the agreement will benefit all Ingram Micro resellers in the region, plus other resellers that in the past have had problems with GBM," said an executive from a medium-size IT reseller in Costa Rica, who asked for anonymity.
This hardware and software reseller ended its business relationship with GBM due to what the executive called "unfair competition" by GBM. "Instead of acting as a partner, they (GBM) played as an unfair competitor, stealing our clients," he said. He also complained that GBM's technical support service was subpar and been the motive of many client's complaints.
"I think Ingram is a much better distributor in the region, with a better bundle of services to offer," he said.
Another reseller in the region also agreed that Ingram Micro has a better offer. "By mid-2001 our contract with GBM ended and we haven't renewed it, because their prices vary from contract to contract, while Ingram Micro's prices are more stable," said Amilcar García, general director of Grupo PS2000 SA, a hardware wholesaler headquartered in Guatemala.
"I believe the agreement is very positive for the region's reseller community. Ingram Micro has a diversity of products, they offer accessible packages including different brands and it's excellent that now we will be able to access IBM products through them," he said. He did say that he found GBM to be more flexible with its credit line than Ingram, which he said asks for more information and guarantees.
GBM was founded in 1991 by IBM and a group of businesspeople as an exclusive IBM distribution channel for Central America and the Caribbean. It has subsidiaries in eight countries.
According to Huszar, in the near future Ingram Micro will announce further agreements with other large vendors for distribution in Latin America, and is reinforcing the networking line. A couple of weeks ago it inked an agreement with Avaya Inc., and is also a distributor for Nortel Networks Corp., Cisco Systems Inc. and 3Com Corp. Ingram Micro is also looking forward to open a distribution channel for mobile phones in the region, Huszar said.