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Distributors dive for cover

Distributors dive for cover

Watching Australia's distributors is something akin to a classic India or Pakistan versus Australia one dayer - they never seem to get the upper hand.

At the risk of forever lamenting the woes of distributors, life has again proved difficult for this segment of the channel.

This week we detail the troubles of two companies that represent two completely different approaches to running a channel company.

In the case of Melbourne-based RHP, we still don't know where the executives have gone after boarding up the building and apparently fleeing the country leaving behind massive debts (see page 6). Sounds a bit Christopher Skasish if you ask me (don't worry, our Tabloid paparazzi are on the hunt as we speak).

As a specialist modem distributor, I suspect RHP found itself outgunned by competitive niche operators with services capabilities, such as Tecksel.

In the case of CHA, it seems like a case of one step forward, lose your balance and fall back about 10 steps.

Once the crown in Toshiba's channel - 1999 distributor of the year in fact - the company appears to be losing ground in its attempt to boost its national presence.

Obviously 1999's financial woes and its fallout with global distie CHS failed to support the cause. In a sense, it's a shame our only national homegrown distributor has endured such troubles.

In comparison, CHA's larger, international marketplace competitors - namely Tech Pacific, Express Data and Ingram Micro - appear to show no signs of slowing their current growth rates.

To single out Tech Pacific in particular, it's becoming commonplace to see more vendors join its fold in search of broad-based distribution nirvana. Recent examples here include Veritas, Philips and Adobe.

I'm certainly not going out on a limb by observing this type of activity will continue well beyond this year.

What I am curious about is just how far, and quickly, the consolidation trends can go this year.

Inform told me last week the distributor count fell from 620 to 595 during calendar year 1999. For the mathematically inclined, that means 5 per cent of all distribution companies have either gone out of business or endured a takeover.

In contrast, resellers don't seem to have the same attrition levels. While Inform did not have comparative figures last week, the majority of resellers are still growing from Y2K- and GST-induced sales. As I argued last week, the Government's offer of 100 per cent tax deductability on GST-related IT hardware and software before July 1 for businesses under $10 million is one of the greatest things to happen to the channel so far this year.

Coincidentally, a small reseller from Taree in NSW told me the last six months have been `flat out'.

Normal January sales of four PCs climbed to 24 this year, which he reports is directly related to the GST.

All this promises to make life very interesting over the next few months. Buckle down for a bumpy ride.

Mark Jones is editor of Australian Reseller News. Reach him at mark_jones@idg.com.au


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