Avnet embraces channel but sceptics remain

Avnet embraces channel but sceptics remain

Distributor cum service provider Avnet's Australian and New Zealand operations are set for a shake-up with the adoption of a new corporate structure, the addition of several new line cards and a closer relationship with the channel.

`We've previously put most things through our sub distributor Legend and the Electronics Marketing division, which previously ran the channel, wanted to ship everything out of Hong Kong and Singapore. They didn't understand how the channel operates,' said Rob Kester, business development manager for Avnet.

Bradley Dowe, senior manager for Legend, is even more critical of Avnet's channel strategy and questions the relevance of a master distributor.

`Our relationship with Avnet is one sided. They never direct any business our way at all -we generate it all by ourselves. They simply supply us with products against our orders.'

Kester outlined a new channel orientation to counter such claims, with Avnet currently in negotiations with several channel partners, mostly leading sub distributors and OEM's.

But instead of its traditional procedure of simply fulfilling an OEM or sub distributor's order, Avnet will work `strategically with its partners'. According to Kester, this includes priority allocation, marketing initiatives and special price offerings. `Our partners can look around but the whole aim is to be a preferential supplier.'

The channel will also benefit from local warehousing arrangements for personal computer components, which were previously all shipped from Hong Kong or Singapore.

`We can be the link in the chain for OEMs and distributors where they used to buy overseas.'

Yet Dowe sees no remedy to Avnet's inability to provide value add to its channel. `If it was up to us we'd eliminate them. They add no value. All they do is delay supply and make it more expensive,' said Dowe.

Kester also outlined Avnet's future product focus, which will centre mainly on motherboards, memory and CPUs. A recently signed deal with Hyundai `allows us to get a lot more out there within the next month because we'll be pushing original modules' said Kester.

Avnet will also realign itself with AMD after letting its elite distribution arrangement with the chip manufacturer lapse.

`We've done the AMD product line for the last few years but we had no channel focus. Now that that's changed we've seen significant increases in AMD sales,' said Kester.

Avnet is one of only two suppliers for AMD, (the other is small distributor APD), and is the sole distributor in Australia of original Hyundai modules.

A new agreement with motherboard manufacturer FIC will also help Avnet consolidate itself in the component distribution market, along with new partnerships with CD-ROM vendor Delta.

Also on the agenda is a new focus on hard drives, with negotiations with several vendors underway. Kester wants the arrangements to kick in at the end of this quarter.

Yet according to Dowe, `They have too broad a focus. What Robbie [Kester] means by taking more products through the channel is trading in everything that has a good price tag at the time. We only deal in four products and focus on memory so are better equipped to deal with the market.'

Alongside this reinvigorated channel outlook and product line-up will be a general restructuring. By mid year the local arm of Avnet will be organised along similar lines to those adopted by its US parent at the beginning of the year.

A new division called Avnet Applied Computing will be added to the Electronic Marketing and Computer Marketing Groups. It will focus on the applied computing OEM market, which had languished in relative obscurity under the Electronic Marketing division.

With its new structure, product lines and channel focus Avnet will concentrate on becoming the number one or two player in each of the markets it operates in, said Kester. Yet with Avnet Applied Computing operations in Australia and New Zealand in the embryonic stages, it is a long road ahead.

`The electronic marketing group is number two. But the PPC side of things has only been operating in the Asia-Pacific region for about five quarters now and in Australia it only started this quarter,' said Kester, who added that officially the AAC group will only be implemented mid year.

But Kester believes that Avnet will be spared the prob- lems commonly facing the industry at the moment, most significantly component shortages.

`AMD is finding that there is a lot of crossover because of CPU shortages Intel is experiencing. AMD shipping has been good, though we're finding that everything is being absorbed very quickly. We're not seeing any price hikes for AMD either,' said Kester.

In fact, Kester believes Intel's current crisis has allowed AMD to take market share and with continued product advancements and price movements will be able to maintain this position, with this entire quarter remaining tight for Intel.

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