Rivals banking on business boost
- 06 October, 2004 12:12
Competing distributors are looking at Ingram Micro's takeover of Tech Pacific as a chance to win new business.
Most wholesalers ARN interviewed said any reduction in the number of players competing for reseller business could only be good news for those looking to supply products.
"If Tech Pacific was carrying a tier-one brand in a product category and Ingram Micro was dealing with a competitor, those vendors might find there isn't the same interest under one umbrella," BCN managing director, Ken Lowe, said.
Lan Systems general manager, Wendy O'Keeffe, went even further, suggesting the acquisition would be instrumental in changing the face of the local IT channel during the next five years.
"I'm looking at this as a cataclysmic shift which will change market dynamics," she said.
"If you look at the last 12-15 years, we have had two other enormous influences on channel evolution: Tech Pacific merging with Imagineering and then Tech Pacific taking over Merisel."
O'Keeffe said these acquisitions had allowed other companies to climb the local IT distribution ladder. In the case of Imagineering, specialist players such as Merisel emerged, she said.
Tech Pacific's subsequent buyout of Merisel a few years later set up another chain of events where other players flourished, including Express Data and Lan Systems, O'Keeffe said.
For Dicker Data's general manager, Angela Coronica, the chance to pick up more secondary supply contracts would be a big business boost.
But she warned the transition would also see both distributors introduce more aggressive pricing.
"They will be focusing on inventory and pricing tactics over the next quarter so we will have to see how the industry weathers that," she said.
Sorting through internal issues could result in a loss of focus on the quality of services to each distributor's reseller base during the transition period, Coronica added.
Brightpoint executive director, Felix Wong, said the takeover provided new opportunities for more specialist distributors to sign up vendors that were uncomfortable dealing with such a large organisation.
"They are broad-based distributors now - they will be really broad- based when they're smacked together," he said.
While the consolidation of two big players is positive for distributors, many suggested the deal could spell bad news for Australian resellers, pointing to shrinking credit limits and a smaller pool of suppliers as potential evils.
"Credit limits and choice of suppliers will be the biggest concerns for resellers," Express Data managing director, Ross Cochrane, said.
"They need credit because their customers are demanding it of them and you have to ask whether the new single entity will consolidate or provide the combined limit of the two previously separate companies."
Similarly, Avnet managing director, Colin McKenna, said resellers of both parties should be concerned about the implications of the new merger on their buying power.
"A number of resellers trading with both organisations from a volume perspective will be thinking about what this means for their credit limits - two and two will not equal four," he said.