Surprise! Synnex added to wholesale line-up

Surprise! Synnex added to wholesale line-up

The appointment of white-box components specialist distributor Synnex as an additional player in the HP distribution channel caught most distributors by surprise last week.

Along with disappointment, there was increased concern that the price war mentality currently pervading the vendor's wholesale hardware sales is set to get worse.

Frank Sheu, managing director of Synnex, said it should not be a surprise and that he does not expect to be competing on price. "Synnex is a huge global partner to HP," Sheu said. "Our entire operation was recognised as Distributor of the Year in 2001.

"We will be targeting a lot of the smaller resellers in all rural areas across the country. They haven't been looked after all that well in the past. [HP] feels this is an area that has not been covered effectively."

Ingram Micro managing director Steve Rust said that he was hoping to see less HP distributors and not more. "There are still too many distributors for a country of this size," Rust said. "This is not a big country and it can probably be adequately served by a smaller number of distributors. But in these times, perhaps they were concerned about credit management in the channel generally."

Dicker Data's Fiona Dicker was clearly disappointed that her operation had been overlooked for access to the imaging and printing group (IPG) products.

"We would have liked to be selling [IPG products] but it wasn't to be," Dicker said. "[The appointment of Synnex] came totally out of left field. HP went through the reasons why they did that and it seemed fairly logical but it doesn't mean I'm not disappointed.

"I guess they are looking for Synnex to help them grow into that white-box market."

Over at Digiland, managing director C.N. Low said he didn't expect to see a major change to the distribution channel in the current tough market but he too was surprised by the Synnex appointment. "The price war is still out there and I don't think appointing a new distributor does anything to help alleviate that situation," Low said. "Margins will continue to be squeezed. We were a little disappointed by it."

Low said the printer market is "shrinking" or "at best flat" in the last six months and that HP is under pressure to perform. "The reason why the market is shrinking is because no-one is making money selling printers. So nobody is focusing on it. This appointment of Synnex only makes the situation worse."

Sheu said that having warehouses around the country means Synnex will not have to compete on price as it can save resellers considerable money on freight.

"I don't think we have to be a price leader because we stock the product in four locations and can often deliver with our own trucks," Sheu said. "Even if our price is not the lowest it is still a better deal for them. We give them discount freight and in many cases free freight because we use our own trucks.

"Combine that with our economies of scale with the other white-box components that we sell to them and it makes it a sensible alliance. If we were just selling the printer alone, we would not survive in this market."

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