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Siltek's turmoil signals vendor exit

Siltek's turmoil signals vendor exit

Toshiba's gone, so are HP retail products, but Seagate's decided to remain loyal. However it all tastes a little bittersweet.

The fallout from Siltek's radical staff overhaul last week saw retail-focused vendors re-evaluating their relationship with the distributor.

As reported last week on ARNnet, hardware vendor Toshiba and Siltek have officially parted ways.

Both parties said the parting was amicable, stating the five-year partnership had been successful. "We're sorry to see the end of this relationship but understand Siltek's desire to focus core business activities in areas other than retail, which is an important business focus for Toshiba," said Phil Cameron, national sales manager at Toshiba's Information Systems Division. Siltek Asia Pacific CEO Bruce Harvey told ARN there was "no animosity with Toshiba".

Meanwhile, Harvey has confirmed Siltek will no longer distribute Hewlett-Packard (HP) retail products, such as its Pavilion PCs, low-end inkjet printers and scanners. HP Pavilions have been one of Siltek's big movers since Prion days.

"As part of our negotiations going forward, [HP Pavilions] would be a product we can't have access to," Harvey said. "It's a no-brainer."

Greg Trigger, HP's channel and alliance manager, also confirmed the loss of HP Pavilions from Siltek's business.

Harvey said while Toshiba and HP are gone, the distributor's corporate-focused vendors will remain. The list includes Iomega, IBM, Sony, Adaptec, Minolta QMS, Hitachi, Kyocera, Acer, Xircom and Enterasys Networks.

"None of those other vendors have products nominated to only be sold through retail outlets," Harvey said. "We have no intention of terminating the relationship with any other vendors."

Importantly, hardware vendor Seagate has remained loyal. Seagate's Australian country manager, Dale Townsend, told ARN recently: "At this stage there is no reason for [the retrenchments] to affect our relationship with Seagate."

Townsend said there are no immediate plans to dump Siltek, despite the exit of Siltek's former CEO Hugh Evans, who has driven the relationship since Agate was established 10 years ago.

Bittersweet

For all the polite talk, the exit of Toshiba and HP retail reflects Siltek's new tough stance on both retailers and vendors in an increasingly competitive market.

Harvey claims industry talk of an IT market downturn of around 25 per cent is in reality closer to 40 per cent, particularly in the Wintel arena. "A lot of people are putting on a brave face and I can tell you it's exactly that, a brave face."

As a result, Harvey lashed out at vendors who expect too much from distributors for little margin. "The margin expectations of what they think a distributor should have [to live on] is naive," he said. "It's a cashflow negative business."

As for retailers, Siltek is not rejecting any retail business, but it must comply with the company's new rule book which vetoes any 1 or 2 per cent margin sales.

Photograph: Toshiba's Phil Cameron


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