Centronics has become the latest channel company to fall victim to the tough economic conditions, closing the doors of its distribution business and leaving a string of debts in its wake.
Phone lines at the Victorian-based distributor remain unanswered, but at the end of last week the company was still registered with the Australian Securities and Investment Commission.
The company ceased operations owing distributors such as Tech Pacific and Ingram Micro more than $1 million collectively, according to industry sources. Dicker Data and Synnex are also among the creditors. The company also distributed product for Australian-owned vendor Swann Communications.
Centronics joins a list of more than two dozen distributors that have shut up shop in 2002, with industry pundits saying the channel can expect more of the same before the end of the financial year.
The carnage is not limited to distributors. Since January, 152 reseller outlets have shut down, according to Inform.
"Falling margins are the main culprit, driven mainly by Tech Pacific, which has been really aggressive in its pricing strategy" said Inform research analyst Luke Solyom. "The company is big enough to cut margins and maintain profits because of the volumes, but that makes it very difficult for the smaller distributors."
The channel is likely to find it tough going while vendors insist on eroding margin, said Solyom.
For the full story read this week's ARN (June 5), out now.