Microsoft will drop Ingram Micro as its exclusive Xbox distributor in favour of a new agreement with Synnex.
The deal with Synnex is also expected to cover Microsoft's other retail hardware products, handheld devices and additional software lines. Synnex has been one of the software giant's OEM distribution partners for the past nine years and stocks Microsoft peripherals, such as keyboards. Both Synnex and Microsoft declined to comment on the appointment, but Ingram Micro managing director, Guy Freeland, told ARN he was disappointed by the decision. Ingram has had exclusive rights to the Xbox console since taking over the distribution agreement from Australia Post in 2005.
"The contract was put up for RFP and we submitted what we thought was a compelling, fresh proposition, but Microsoft has chosen to go with Synnex on the product set," Freeland said.
"We have had a long and successful trading relationship with Microsoft and would have been their number one distributor in this country. I think this decision is unfortunate and a disappointment to us, but we still have a very strong partnership with Microsoft and they will continue to be an important vendor for us."
Freeland said it had been a difficult year for Xbox in Australia, and the vendor was hoping to see improvements this year.
"Gaming has not been a huge part of Ingram's business," he said. Ingram currently has about $30 million worth of Xbox and related stock in its warehouses. Freeland said it was now negotiating with Microsoft to transfer the goods "lock, stock and barrel" to Synnex and hoped details would be finalized shortly.
The new arrangement with Synnex is expected to commence before June 30.
Freeland denied claims from industry sources that Ingram could retrench up to eight staff following the termination of the agreement.
"We had a large team built up specifically to work on the Microsoft Xbox and retail business that we had developed hand-in-glove with Microsoft. This will have to be disbanded," he said. "I don't think there will be any retrenchments - one or two people have resigned and we have redeployed most of those other people into other areas of our business."
The deal with Microsoft will give Synnex a significant leg-up in the retail space. Industry representatives said the contract could be worth as much as $150 million - $200 million annually.
In an interview with ARN earlier this year, Synnex CEO, Kee Ong, highlighted retail as a major area of focus for the distributor. His comments followed Synnex US' decision to acquire CE distributor, New Age Electronics, for $US54.2 million in February.
"Retail is booming for us at the moment and we're putting a lot of focus on this space as it is part of our growth strategy," Ong said at the time.
