Lobbying for the Channel

Lobbying for the Channel

Brett Winterford discusses the ins and outs of starting up a channel-centric trade association with the man who championed such a cause in the UK, Keith Warburton.

Who is the PC Association?

The Personal Computer Association is a not-for-profit trade association of businesses from all parts of the industry. We include component manufacturers (such as AMD, Intel, nVIDIA) distributors and national direct sellers. However, our largest group (about 80 per cent) of members are smaller dealers, system builders, value added resellers, so membership spans the full range of businesses from those with a turnover of less than $275,000 to top shelf companies turning over $275 million. As we enter our 10th year we are making the transition to a Professional Computing Association and opening up to individual membership.

How did the association start out?

I founded the PC Association. My background is sales (and marketing) in the component side of the industry - disk drives and motherboards. I’d always been concerned about low levels of professionalism in the industry, and lack of dialogue. I started out by inviting a few of my contacts to come and have a cup of coffee and see if there were “issues of common concern” that they’d like me to pursue on their behalf ... and we found that the best way of doing so was as a trade association. At first we were a small group of direct-sell system builders who recognised we had common interests — some industry issues that were threatening us — and who saw some benefit in jointly tackling those issues. We had to decide whether we were a cartel or a trade association and act accordingly. Later we found that distributors and vendors recognised that we were “the good guys” and wanted to associate with us, and so we broadened our membership criteria.

What are your aims and how do you go about achieving them?

Some of our marketing has the strap line “keeping the industry as strong as possible, for as long as possible”.

We do the usual trade association stuff - lobbying the UK Government and the EU, and providing appropriate information on relevant “issues” to our members. These range from legislative matters to trade and commercial issues. We spread this information and canvas members views via our regular newsletter and through meetings. We have several types of meetings: an AGM and conference with mini-exhibition, an ordinary general meeting and forum, and dinners. Whatever the type of meeting we always have a dinner and plenty opportunity for “networking at the bar”. The networking side is very important. Before we started, there was no opportunity for the industry to get together, exchange experiences and build alliances. In otherwords, to build a strong industry.

What are some examples of the successes of the association in raising and addressing issues on behalf of its members?

We contended that Microsoft’s discriminatory OEM distribution policy on Office, in 1995, was an abuse of a dominant position. This was at a time when the product they allowed System Builders and OEMs to bundle was Works ... unless you were Dell or Gateway, in which case you were allowed to bundle Office as an OEM product. If smaller OEMs wanted to compete on that product, they had to buy the retail version of Office. This cost them the equivalent of about $US250, while Gateway was paying (we believe) under $US70, giving them a massive financial advantage over smaller system builders. No wonder their sales and profitability grew massively at this time. And no wonder when that advantage was removed their growth started to plateau.

We complained to the EU Competition Directorate and they started an investigation. A few months later Microsoft introduced Office SBE which all OEMs had to take. A major success, we’d say! Historically, we also challenged Microsoft regarding some of its anti-piracy/anti-grey activities. This, and the Office issue, resulted in them deciding to talk to us. Relationships and co-operation have improved massively since. We’re now pretty happy with the way they conduct their relationship with the channel here in the UK.

Do government bodies and regulators pay much attention to such industry bodies?

We’ve had to work hard to break though the mindset of the old guard of government administrators. In the UK the older electronics trade bodies were taken to represent the whole of the ICT industry. When I first started dealing with government departments here they thought they already had the views of the PC industry, even though the trade body they were dealing with had only four or five of the “old fashioned” computer manufacturers as members. Indeed, I once asked a key government advisor how many computer builders there were in the UK. She said “about eight”. There are at least 10,000. Admittedly, the eight manufacturers she thought of built about 30 per cent of the computers, another 20 per cent were not built in the UK (coming in from Dell and Gateway in Ireland). But about 50 per cent came from those 10,000 small businesses. And that is significant. The needs of those 10,000 businesses must be taken into account — more so than the needs of the top 10 manufacturers. We are now routinely consulted by government whenever it’s appropriate.

There is no such association operating in Australia. What advice would you give to the channel here?

The impetus for trade associations comes from “issues” that are bigger than individual players. If we feel we can handle the challenges that business throws at us we don’t look outside our own resources that have stood us well in the past, but when we are faced with something bigger than us, as an individual, suddenly we see the sense of concerted action through co-operation ... a trade association. The first thing I’d say is strike while the iron is hot. Here is a moment (which will pass all too soon) where the trade may be receptive to the concept of association.

Our experience is that you then have to find a widely trusted individual who can identify the problem and make a call to action. This makes it difficult to have as a prime mover somebody who is currently directly involved in the marketplace. In the UK we were lucky. I’d come from being an employee in the industry to being self-employed and needed clients. I found there were too few companies that could individually afford me, but they could, jointly.

Which brings us to the next point, that of money. You’ve got to thrash out the financial basis of the organisation fairly promptly. Here, as in many organisations, we have a scale of membership charges that mean the smallest of businesses can join — and feel an equal contributor to — their trade association, whilst not placing an unfair burden on the larger companies.

Your trade body must do its damnedest to be inclusive, not exclusive (a mistake we discovered in our early days). It would be useful in your early days to recruit a few “philanthropic” sponsors, businesses that will probably not directly benefit from the Association, that have some money and that don’t mind being seen to act “for the good of the industry”.

You need stickability. Do things for the members that they benefit from and enjoy. For us our meetings and forums give the industry an opportunity to get together in a shared environment, without owing the event to any one vendor. When you’ve been used to ploughing a lonely furrow, it’s warming to meet up with other folk and find that your problems aren’t just your own.

Finally, recognise that in order to do things “properly”, most trade bodies can only progress by consensus - which usually means slowly. This is hard for people who are used to making their own, immediate decisions, to take on board.n

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