Back to basics for Cellnet

Back to basics for Cellnet

Resellers have played down HP's decision to part company with Cellnet and argue a robust execution strategy should be top of mind for the struggling ASX-listed distributor.

Last week, HP's personal systems group (PSG) announced it was cutting ties with Cellnet from December 1. The vendor will retain Dicker Data and Ingram Micro as PSG distributors. It also sells notebooks and mobility products through Synnex.

Cellnet managing director, Stephen Harrison, said it could be better off without PSG. He said both sides had poured several hundreds of thousands of dollars into the relationship but had not seen an adequate return on investment (ROI).

"HP was only a small percentage of our revenue - we will probably be saving money," Harrison said. "In terms of our top line, [HP] was not substantial, but on our bottom line, it was negative."

He also pointed to the vendor's siloed distribution model for PC, printing and server products as another reason for the tough selling conditions.

HP joins a growing list of major IT vendors pulling stock from Cellnet's warehouses. This year alone the distributor has also lost Apple, Sony (headphones) and Kyocera. But executive director of Queensland-based IBM integrator Sundata, Kon Kakanis, was unperturbed by the news of Cellnet's shrinking vendor base, saying it was more important the distributor get its logistics in order.

"Cellnet has lost HP and Sony - so what? I'm more interested in them working out what they are doing with a quality of execution," he said. "If they get that right, then having fewer vendors can be a good thing."

Kakanis recently met with Cellnet staff and said he was heartened by its attempts to improve its operating capabilities and market strategy.

"The main thing for Cellnet is getting consistency on pricing, availability and so on," he said. "I like the idea of having three robust, competitive distributors - I don't like having one that's streets ahead of the others. You want to know you can trust company B just as much as company A." Aspire Computing director, Chaim Lee, was also critical of Cellnet's customer service and stock availability but said he would be upset if the distributor dropped out of the market.

TLC Data Systems' Rob Boogers agreed HP didn't have a big effect on its business with Cellnet and was also keen to see it retain a strong market position. But DPI Systems director, Michael Blumentals, said a distributor with less key vendors on its books risked losing revelance.

While most agree more consolidation is on the cards, resellers were divided on whether a merger or acquisition would be in Cellnet's best interests.

Kakanis said a merger could only be successful if both sides had a good grasp on what they were delivering. He questioned the validity of a merger between similar organisations, such as Synnex and Cellnet, and said Cellnet would be better working with a complementary player like Express Data.

In contrast, DPI's Blumentals and Aspire's Lee said Synnex was a logical choice in terms of building up market clout. Dicker Data could also be a candidate, but ran the risk of vendor conflict, Blumentals said.

In the meantime, Harrison has reiterated Cellnet's commitment to staying in IT distribution. The company had held talks with Synnex in the past but had no current plans to merge with another distributor, he said.

"We previously had balance across the telco and IT sides of the business before. We lost kilter with that and we want to bring that back," Harrison said. "At the moment, we need to concentrate on getting back to basics."

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