Ingram's ER acquisition no threat to local market yet

Ingram's ER acquisition no threat to local market yet

With its reputation sullied by last year's Intel chip scandal involving its affiliate Electronic Resources Australia (ERA), global distributor Ingram Micro has put an end to the speculation by acquiring its Asian partner.

The takeover, which was effected on January 4 when Ingram acted on its option to add additional shares to its existing 20.9 per cent stake, will allow the distributor to press ahead with plans to shake out the local market. However, Australia's top two distributors, Tech Pacific and Express Data, remain unconvinced that Ingram will be a force to be reckoned with in the short term.

When contacted last week, Ingram's Asia-Pacific president Greg Spierkel was tight-lipped about plans for the distributor's Australian assault, however he will be in Sydney this week to address ERA officials and local vendor partners.

Spierkel was at liberty to confirm that Ingram would naturally be taking a serious interest in ER's long-term business investments in the region.

Last year was a lamentable period for ERA/Ingram as the distribution conglomerate was left to pick up the pieces following the discovery of a multimillion-dollar Intel chip racket.

Positive spin

While both Ingram and ERA officials did their best to put a positive spin on proceedings, the conglomerate's reputation in Australia was severely tarnished.

The duo's Australian distribution rivals also have long memories, it appears, with Tech Pac's managing director, David Cullen, and Express Data's national sales and marketing manager, Ross Cochrane, reopening the Intel chip scam, which ultimately led to Intel indefinitely suspending ERA's distribution rights.

"News of this acquisition is disappointing considering the events of the past year involving Intel," Cullen said.

Cochrane agreed, commenting that Ingram officials would have cringed at the thought of having to deal with such a crisis.

"This deal signifies that Ingram was not that happy with the lack of control that was being demonstrated by local ERA management, in particular the way in which the Intel scandal was handled," Cochrane claimed.

Certainly ERA and Ingram have wasted no time in attempting to rebuild its shattered image by appointing Michael Shea, the former general manager of ERA's Victorian operation, to the position of managing director.

Speaking to ARN while on holidays in northern New South Wales last week, Shea spoke of his deep sorrow and regret at the events surrounding the product tampering and chip re-marking scandal which emanated out of his Melbourne branch.

However, he was quick to highlight the positive influences that Ingram have had on ERA's activities over the last 12 months.

"Ingram offer some clever and useful partner programs in the US which we hope to adopt in Australia very shortly.

He added that negotiations with Hewlett-Packard, recognised by many industry pundits as the missing jewel in Ingram's distribution crown, are still well under way.

"If we can secure that HP partnership it would be great, however they [Hewlett-Packard] are very strict and demanding in their selection criteria."

Rhetoric, though, holds little weight with Tech Pac's Cullen and Express Data's Cochrane.

"Ingram has already been here for the last 12 months and most people would agree that they have been controlling ERA's destiny during that time," Cullen said.

"Ingram had to kick-start the acquisition because it has poured a lot of money into Asia and Australia.

"They have a lot at stake in the region and it was a logical step for them to gain a majority control over the business," Cullen added.

Limited impact

Express Data's Cochrane added that Ingram would have a limited impact on his business in the short term, claiming that ERA's core competency still lies in component distribution.

"Despite signing with Compaq and IBM, ERA/Ingram are still largely focused on providing components with a systems bent," Cochrane said.

"We see the systems business as being a very tough market at the moment. You're dealing with largely commodity products, such as PCs, with low margins and high risk.

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