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Editorial: What next for Big Brother?

Editorial: What next for Big Brother?

Many people working in the Australian IT channel will have felt like they had been watching a low budget whodunnit last Monday when it was finally announced that Ingram Micro was to pay $700 million for Tech Pacific. There were a few twists and turns along the way - will Tech Data enter the market, is Synnex interested, will there be a public flotation? But, in the end, it was the jealous love rival after all.

Rumours of a takeover first started spreading across the industry three weeks ago but were dismissed as exactly that by the powers that be within both organisations. All of a sudden Tech Pacific CEO, Shailendra Gupta, wanted to tell anybody that would listen about plans for the company to float on the Australian Stock Exchange before the end of the year.

But the recent visit of Ingram Micro's CEO and president, Kent Foster, was always likely to be based on something a little more significant than pressing the flesh with his local management team.

Provided there are no regulatory hiccups along the way, the deal will create the largest and most powerful IT distributor the Australian market has ever seen. But what will it mean for the employees of both companies and everybody else in the channel?

Both local management teams have played down any suggestion that amalgamation will mean job cuts.

However, the reality of two such large and similar companies coming together is that there will be plenty of duplication in middle management, administration and warehousing staff that will be removed as part of the process. Such 'economies of scale' are the easiest way of saving money and making a quick improvement to the bottom line.

From a reseller perspective, nearly all will have dealt with Ingram Micro and Tech Pacific at some stage over the years.

Most will still be doing so on a regular basis. The nature of business relationships means many will prefer one distributor over another and have different takes on the implications of this deal for their business.

Those with stronger Tech Pacific ties, such as Leading Edge resellers, will feel they have the most to lose when it comes to dividing up the new organisation's credit pie. But given the high regard in which the Tech Pacific sales team is held, many of the current reseller/distributor relationships seem likely to remain intact under the Ingram umbrella.

Looking up the distribution chain, vendors are keeping their cards close to their chest. However, they must be worried that the internal job of pulling these two industry heavyweights together will lead to a lack of focus on getting their goods to market.

Many will decide they are happy to have greater reach into the reseller market. But those that have recently undertaken costly and time-consuming review processes will be sitting down again before too long to see if the new set up still meets their needs.

But if resellers are worried and vendors are wary, many other Australian distribution companies are genuinely excited by the prospect of having one less bigger brother to compete against. There is also a feeling that the new superpower's teething troubles could end up feeling more like open heart surgery. If this happens, and a feeling of discontent starts to spread among Ingram's reseller and vendor partners, you can bet your bottom dollar that there will be no shortage of predators waiting to pounce.


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