EDITORIAL: Turning the corner

EDITORIAL: Turning the corner

Ingram Micro, an enigma in the Australian channel, has played its trump card and will now have to wait and see if it was good enough to win the trick.

Make no bones about it, the deal that Ingram's Steve Rust has just cut with Compaq - a vendor that is perhaps even more enigmatic than Ingram - is designed to create a line of business that will finally bring the global distribution giant a happy home Downunder.

Every man and his dog has been keen to perpetuate the theory that Ingram Micro has been tearing up large amounts of money in Australia since bringing ITG and ERA together in 1999 and launching in this country.

The truth is unknown, but the rumour mill has suggested all along that losses were huge. It also suggested that the only way Ingram was going to emerge as a serious competitor to the Tech Pacifics and Express Datas of the channel was with significantly cheaper prices or a preferential deal with a key supplier. Perhaps even a combination of the two.

Compaq will deny to the ends of the Earth that its deal with Ingram Micro disadvantages any of its other distributors, but the reality is that it must. Pushing aside the smoke and mirrors of two well-minded US-listed companies, the bottom line of this deal is that, in exchange for guaranteed sales and reseller numbers, Compaq will give Ingram preferential supply, support and pricing.

Ingram Micro is going out on a limb to dominate Compaq's first-tier of distribution. Some could argue that Ingram is attempting to corner the Compaq market with prices, availability and trading terms that will be hard for Compaq resellers to resist and nigh impossible for competitors to match.

Current partners including Dicker Data and Express Data must lose ground as a result of this deal.

Ingram has now started to look a lot more like the market force it was expected to become but which it has so far failed to achieve. Key supply arrangements with Toshiba after CHA's collapse and now Compaq gives it far more effective lures than it has been able to troll the market with to date.

What the distributor has been lacking is a couple of market-leading brands to which it can apply its US-bred low margin systems and methodologies. Having these key products at the best available prices gives Ingram a strong platform from which it can build its customer base.

Competitive pricing on Compaq and, to a lesser extent, Toshiba product will get resellers ringing Ingram Micro and buying from them. It is then up to the distributor's sales staff to start developing relationships with them and cross-selling to the broad range of other suppliers on Ingram Micro's books.

Ingram has to make the numbers to get the rebates that will allow it to offer unrivalled prices to the channel, but it is obviously confident it can do that. It is the kind of play that can only be made by a company with vast international resources, which Ingram has.

Steve Rust is no fool and no newcomer to the IT channel. When he took on the gig as Ingram's MD, he knew he needed a showcase brand upon which he could hang a lot of reseller activity. Compaq appears to have been anointed as that brand.

For Ingram it is a win/win situation. For Compaq it could be a slightly more dangerous liaison. We are yet to see just how jealous the PC vendor's other partners will be at the perceived preferential treatment secured by the awakening giant of Australia's IT channel.

Will you abandon your current Compaq supplier for Ingram's better prices and trading terms? n

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