Up until the turn of the millennium, consolidation in the distribution channel tended to push sales of networking products through the broadliners.
However, recognition of the value of networking specialists has reversed the trend. For example, CompuShack and Azlan have become the networking arms of Ingram Micro and Tech Data respectively.
Ingram Micro's philosophy towards acquisitions is to target national companies, while Tech Data has a preference for international firms. During a visit to Tech Data in Clearwater, Florida, in January, EuroLAN Research was questioned on the efficiency of the Azlan model of centralised logistics.
Despite this detailed scrutiny we believed that Azlan was preparing acquisitions of its own rather than preparing to be acquired. It will be interesting to see if Ingram Micro/CompuShack has plans to acquire a voice specialist as the next step forward.
Cisco reduced the number of its distributors in Europe from 57 to seven when it introduced its Cisco Distribution Partner programme in 2001, and the acquisition of Sphinx CST by Ingram Micro and now Azlan by Tech Data have reduced the number even further.
Cisco was instrumental in encouraging these acquisitions, because they not only greatly reduce the cost of doing business with a large number of distributors but ensure timely sales-out information.
Hewlett Packard (HP) appears to be engineering the current acquisition of Actebis by Westcoast in its desire to introduce a logistics service provider that has a focus on HP products.
Westcoast chairman Joe Hemani has displaced Michael Urban and has stated his intention to purchase Actebis across Europe and retain the name. He has said he intends Actebis to move from a position of being the "third distributor", behind Tech Data and Ingram Micro, to challenge for second place in Europe.
He will certainly have his work cut out, as Actebis has been losing money for its current owner, the Otto Group, and needs to be turned around.
Westcoast's focus on HP has paid off as the company has put its full weight behind the deal, in terms of contracts, if not when it comes to financial backing.
The only downside appears to be the membership of Westcoast's European Wholesale Group - a collaboration between Esprinet in Italy, Also in Germany and Switzerland and Copaco in the Netherlands - because Actebis offers too many overlapping countries.
A single-vendor focus has become a fashionable business model in networking distribution. Examples are Comstor (Cisco) and NV3 (Avaya). But defining a niche to focus on has more proponents. An example is security, with Allasso, equIP, e92plus and Unipalm all competing in this space. These are the true value-added distributors, bringing new technology to market and engaging the channel.
Voice versus data
In the convergence market there is a remarkable difference between the voice and the data channels in their attitudes to distribution. A data reseller will view the distributor as a necessary evil. If it has to deal with the distributor then the reseller simply wants the product in stock and to be able to buy it at the best price.
In contrast, the telecoms distributor is viewed as a partner and one that the reseller would happily bring onto its customer's site. The conclusion for a distributor contemplating acquiring a telecoms distributor is to leave it with its own identity - as the broadliners have done with the Azlan and CompuShack acquisitions.
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Top 24 UK networking distributors (£M)
Company/Network sales 2002/Trend from 2001
- Computer 2000/Azlan UK/333/Up
- Anixter UK/99/Down
- Ingram Micro UK/69/Down
- Westcon UK/68/Up
- Acal Electronics/22/Up
- Enhancement Technologies/19/Down
- Magirus UK/18/Down
- XMA Computer Products/18/Up
- Spot Distribution/5/Up
- Norwood Adam/4/Up
- Comtec UK/2/Down
- Network Utilities Systems/2/Down
- Westbase Technology/2/Down
- equIP Technology/1/Up
- Actebis Computers/1/Down
Source: EuroLAN Research
Top six UK telecoms distributors (£M)
Company/Telecom sales 2002/Trend from 2001
- Crane Telecommunications/81/Up
- East Central Distribution/76/Up
- Rocom Group/70/Down
Source: EuroLAN Research
Keith Humphreys is managing consultant at EuroLAN Research (01202) 670 170.
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