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Harvey Norman blues with IBM

Harvey Norman blues with IBM

Retail giant Harvey Norman has again made it very clear it will not do business with IT vendors that it considers competitors, giving IBM its marching orders over direct-selling manoeuvres.

The move represents a growing retail headache for IBM which had earlier lost support from Harris Technology which no longer keeps the brand in its stores.

Harvey Norman's general manager of computers and communications, John Slack-Smith, confirmed IBM product will no longer be sold through HN retail outlets after the two agreed their business models were no longer compatible.

"IBM's go-to-market model is looking very much like Dell's," Slack-Smith said. "The reality is that Harvey Norman's and IBM's paths are heading in different directions."

"We're just about out [of IBM stock] now. We have been gradually winding down [inventory] over the last six weeks. "Slack-Smith said that IBM product will be replaced by "Packard Bell, Compaq, Toshiba, HP and possibly Acer" and that "Harvey Norman is not concerned at all" about the strength of sales in IBM's absence.

Harvey Norman is not the only reseller currently at odds with IBM. Coles Myer-owned Harris Technology no longer includes IBM product in its catalogue or on its retail shelves. However, Harris Technology managing director Ron Harris admits he does still sell the vendor's product into the corporate sector.

"You have to be pragmatic about it, that's a business reality," Harris said. "I raised the same issues [as Harvey Norman] in January when IBM first started selling direct. All they've done since then is put more direct sales out there. They're targeting the SMB market with the online sales. They're targeting our heartland."

Harris applauded Harvey Norman's decision to drop the range. "Why should we compete against our suppliers," he said. "Harvey Norman has been slow to realise the reality of the situation but I am surprised the reseller community hasn't yet been alerted to the fact that IBM is such an active competitor."

"I don't think IBM is aware of the impact their direct strategy has in the reseller channel."

Evan Williams, IBM's marketing manager of the personal computing division, said a breakdown in retail store arrangements with Harvey Norman was "a concern" but not the end of the world. He also claimed direct online sales were a small part of the business.

"Our [Harvey Norman] relationship has come to a point where we are going down different paths," Williams said. "IBM will be concentrating on the commercial part of the market. [Retail] is not going to be a focus."

Williams said there was no room left for movement in negotiations between IBM and Harvey Norman, but the vendor was happy to fall back on its consumer-market relationships with "about 10 other retailers" including Dick Smith Electronics.

"We have definitely reached an impasse [with Harvey Norman] as far as the consumer market is concerned, but I think there is still a big opportunity to work with them in the VSB (very small business) market with a commercial offering."

Williams was keen to defend the vendor's online direct sale mechanism as "giving customers choice" in how they purchased IBM hardware. He said direct sales were "still a small percentage of our business" and he didn't see that changing in the future.


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