Those PCs are at it again. No sooner do you turn your back, than the PC industry suffers another upheaval with clear implications for the UK channel. Just as you're still scratching your head wondering how Tiny managed to rocket into the top five UK PC vendors, two big players announce their marital intentions.
Fujitsu and Siemens, two businesses that have been living in sin for some time now - the companies had already merged their information and communications segments - are finally planning to marry off their computer systems divisions to create a £4 billion giant that will become the world's fifth largest, and the biggest non-US, computer business.
The reason for this marriage of convenience is simple: margins - there just aren't enough of the things.
PCs, which in the end will probably be given away free, are trapped in the industry's most vicious price battle and there's nothing that can be done to alleviate the downward spiral. The Fujitsu/Siemens pact is nothing more than an expensive way to protect existing business from marauding US firms. Both companies have claimed that no jobs will be lost because of the deal, but it's highly unlikely that their channel operations will escape a certain amount of pruning.
No one involved with either would admit to that of course, but you can be sure the phone lines of both companies were humming furiously when resellers got wind of the deal. And why not? It's not as if mergers such as these end up with more resellers being taken on.
Unlike many of the so-called mergers in the telecoms sector (how many of them ended up with the networking companies' names before the telcos'?), this one will be a 50:50 deal and although it still has to pass all of the regulatory conditions of such mergers, you can be reasonably sure that the imaginatively named Fujitsu Siemens Computers, will be in operation on the proposed date of 1 October.
But not even the US giants are free of the PC curse. Compaq has just released a profit warning for its forthcoming second-quarter results. The tone of the warning is very ominous indeed, suggesting the proposed changes and restructuring will see the vendor wipe more than $2 billion from its overheads.
Compaq's slashing of $2 billion from its costs is not so much safe slimming as a crash diet. The decision to take the scalpel to its organisation comes just a month after Compaq decided to seriously curtail its direct dealings with the channel by reducing its direct channel partners in the US from 39 to four. It is also planning to revamp its consumer PC range with some cheap, low-end models, something the company has never really been very good at.
But Compaq maintains that most consumers are buying PCs to get on the internet so these machines, which are expected to come in at about the £600+ mark, will be packed with internet options. Let's hope so, considering that it's only consumer sales that are keeping the entire PC market above the waterline at the moment.
At the current rate of change, we can expect fewer players in the PC sector by next year. Fewer players means that less routes to market are needed and resellers on the fringes will either go down the pan or find other business.
The third option is an increase in reseller mergers, something that has been predicted, but not yet seen in force, thanks to a stronger than predicted economic climate. Maybe Compaq's cutbacks, which will include the channel, and the latest vendor merger will prompt the consolidation of survival that has to happen en masse, sooner or later.
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