Editorial: Some like it hot

Editorial: Some like it hot

In case you haven’t noticed, life is hotting up in distieland and vendorland alike. Yep, the good ol’ days of public slugging matches are back! And ain’t it grand!

First, Digiland accused Esys of stealing its customer database. Then, Esys’ GM of components and an ex-Digiland employee, George Skaf, hit back saying Digiland will have to cough up some serious legal money if they keep making “false and misleading” statements. Then, Digiland emerged as a star of “investment” (in eXeed’s speech) and “acquisition” (in Digiland’s speech) talks with Michael Bosnar’s eXeed, who found himself embroiled into a public controversy over terms and conditions of the merger for the second time in less than three months.

Barely have his fingers healed from slight burns caused by the announced — and then recalled — merger with Dicker Data, and he is once again taking the public through the semantics of mergers and acquisitions. Is it a minority or majority stake? Is it an investment, a merger or an acquisition? Whatever the case may be, the real question, of course, is what’s happening on the other side? Digiland has let go of its managing director before the ink has even dried on his contract papers.

In addition, 35 more people were let go and the future of its vendor relationships are not quite certain. It’s no secret that Digiland has not been doing that well from its vendor agencies. It’s no secret that, just like eXeed, it is tipped to be the loser in the new HP line up — and it may have, in fact, already lost it. Despite both HP and Digiland dodging the issue the HP logo is conspicuously absent from Digiland’s website. But that’s OK, according to Digiland — for it is going to focus on its traditionally strong componentry business and the booming white-box space now.

Both eXeed and Digiland need to find a new business model for themselves — the former to replace its HP business (which was probably the primary motivation behind the Dicker bid), and the latter to save itself from the effects of its crumbling brand business. Digiland’s vendor agencies might indeed work better under eXeed’s streamlined no-stock distribution model, all of which would suggest that it is eXeed, (who, remember, is the cashed up one of the two,) is buying Digiland.

For Digiland, the semantics of “majority shareholding” are more than a financial matter — it is a face-saving exercise.

Given that no new MD is being appointed to replace Kruss, logic suggests that Bosnar will be heading both operations. As for Esys, well, Digiland’s nerves seem to have gone a bit jittery, but what’s the real story behind it? One would suspect that it is tough competition, the steady decline in their branded business and a perceived threat to their components business (there’s no doubt that Esys with its aggressive plan to own 40 per cent of the HDD market and competing agencies can certainly be seen as such), that is more likely to be motivating Digiland’s behaviour. And, as this latest saga unfolds, all eyes are on HP, which, according to industry rumours, has been actively “encouraging” its partners to consolidate. Whether or not that will guarantee any of them the HP business, remains to be seen.

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