A bundled pricing strategy for NEC’s low end servers has created a cross-border rift between New South Wales and Victorian distributors who claim price disparities are making it hard to move stock.
NEC distributors are outraged over a $300 gap in distributor pricing for the NEC 5800 series 110EF low-end fileserver. NSW-based Dicker Data offers the product for $1680 (excluding GST) while Victorian-based distributor Westan lists it at $1960 (excluding GST).
According to sources, the server has also surfaced at reseller sites for less than Dicker’s $1680 list price.
Dicker placed the original order with NEC in October. The product was shipped through November and December. As a result Dicker’s price for the server was at odds with that of Westan which outlayed $100,000 on 5800 series servers just before Christmas - at full list price.
Westan now claims it is struggling to move the units which under normal circumstances should be an easy sell. The NEC 110EF is a P4 2GB machine, bundled with a five-user Windows license. The license element alone retails independently for $1100-$1200.
“We’ve made a significant investment in stock, goodwill, education to our staff and talking to our reseller partners," a Westan source, who did not wish to be named, said. "It makes us look like a tier-three distributor.”
Former NEC general manager for server products, David Henderson, said the cheaper units were the result of a special price given to Dicker in October last year when the company signed on as NEC’s first – and only – distributor of server products.
“It was a special price,” Henderson said. “Dicker put in a volume purchase of about $150,000. There was no other distributor at that time so there was no conflict. Every other order since then has been at list price. There was no favouritism.”
NEC Business Solutions vice-president David Haynes said that NEC staff had met with all of its distributors to discuss the issue.