Toshiba defends its link-up with C2000

Change in policy over one-tier model upsets parners.

Toshiba UK's distribution model has never been typical of other IT vendors, and now it is not even typical of itself.

Over the past eight years, ignoring standard practices in the UK market, Toshiba has resolutely insisted on nurturing a one-tier distribution model.

Despite even its own European counterparts' use of two-tier distribution, Toshiba UK has essentially ignored big names such as Tech Data's UK arm - Computer 2000 - and Ingram Micro, in favour of hybrid distributors such as CCD (Computacenter's distribution operation), ETC and ICL Multivendor.

This stoical stand against using the broadliners has been defeated and Toshiba's full range of computer products, including notebooks and desktops, will now also be available through C2000.

So why change distribution policy now? Alan Thompson, director of the PC division of Toshiba UK, explained: "Within the past two months, we've seen Technology disappear, ICL Multivendor defocusing from distribution, and Elcom being bought, so hybrids are being concentrated in fewer hands.

"We are also very much aware of a 'Europeanisation' of customer activity and virtual trading organisations, and that we need to be in a position to deal with international customers. These can be provided by C2000, plus logistical support. Of course, we'll be listening to our customers and we want to keep faith in the channel," he said.

Thompson added that as a result of Toshiba running a much thinner distribution model - handling three days' worth of inventory as opposed to the previous one month's worth - it meant product being absorbed as soon as it was out on the market.

"If resellers haven't got it, they need to go to the channel to get it, and some see hybrids as competition. C2000 will be neutral territory."

He continued: "This is not a kneejerk reaction - the pressure has been building for some time. No deep animosity has been shown by our hybrid partners towards C2000's appointment. We haven't struck any special deal with C2000, it's on the standard contract we have with all our distributors."

Although Thompson insisted that animosity between its hybrids and C2000 does not run deep, it does not mean none exists.

Mike Jones, general manager of CCD, said: "I'm disappointed with the announcement. There are lots of Toshiba distributors in the market already and the only key differentiator will be price. It will result in price erosion through attempts from C2000 and others to secure their position in the sector. The easy option will be to throw the margin away for the sake of a deal, but we won't do that."

Jones also puts Toshiba's move down to pressure from C2000: "It has been pushing at Toshiba's door and trying to get a deal in the UK. It has asked so many times, I guess it becomes harder to say no."

It is true that C2000 has been courting Toshiba. Graeme Watt, UK managing director of C2000, revealed that he has been working on a deal with Toshiba for the past two years. But whatever conspiracy theories may be sprouting, as with any vendor, incremental sales and increased market penetration is the name of the game.

Toshiba has made no secret of the fact that it wants to increase its presence in the SME market. The distribution deal can be seen as a reflection of that and the realisation that hybrid distribution was no longer achieving its marketing objectives.

The vendor is eager to brand itself, not only as a number one notebook manufacturer, but also as a total hardware system vendor for businesses, pitching itself against companies such as IBM, Hewlett Packard and, of course, Compaq.

C2000 can offer it the means to do this because it has a comprehensive SME programme, which Watt claimed Toshiba is "anxious to get on to", and it has a broad range of products.

Toshiba, although the big cheese in notebooks in the PC sector, has done virtually nothing. The same can be said for its presence in the server sector - the only way to make any impact in this market is through the trade distribution route. If the company can succeed, then it can bring in its PCs and notebooks on the back of the servers.

But while Toshiba has clear ideas about what it expects of C2000, what C2000 wants to concentrate on may be a different matter. As Brian Burke, Computanet manager at Dun & Bradstreet, pointed out: "C2000 obviously wanted to obtain a brand name such as Toshiba and get it on board, and particularly wanted the volumes it can bring with it, but the latter is mainly gained through Toshiba's notebooks.

"Toshiba, on the other hand, wants C2000's concentration to be on its PCs and servers, which are not so commercialised. It depends on what C2000 can do with the deal, but I imagine PCs and servers are not what is whetting its appetite."

Whether Toshiba will appoint another broadline distributor is yet to be seen. Thompson claims that any distributor interested in carrying the Toshiba product range will be given a fair hearing - just no special deals.