As all in the dealer community know, the industry is going through an era of consolidations, mergers, and takeovers. This might be a good time to reflect on what it will mean for our employees, our customers and ourselves.
Three or four years ago, leading industry analysts were telling us our only strategy was to 'get big, get niche or get out'. Some resellers saw this as a call to get out of being PC dealers and turn themselves into IT service companies in the belief that this was a way of increasing gross margins.
The margin percentages went up as planned, but consultancy, even if billed out all the time, cannot generate the same turnover as a trainee box-shifting salesperson. Substituting services for product sales makes your company smaller.
Moving into a niche was never a realistic option. Niche companies start out by exploiting their founders' expertise, and then usually stay that way.
The most effective method for getting big has been through acquisitions.
If you can raise the money, why wait for organic growth? From the target company's point of view, it might be worth considering whether you are going to be integrated into the buying company, or merely act as part of a collection of business units growing cash for the parent company to harvest.
We are currently seeing both of these approaches to consolidation. Global buyers such as CHS Electronics and GE Capital are primarily concerned with amassing companies that will increase shareholder return rather than build up large business entities.
These multinational conglomerates can be demerged relatively easily if parts fail to perform.
When Tplc became part of ICL six years ago, it began a process of establishing multivendor business capabilities within the group. In return, the company did not need to acquire a maintenance company, outsourcing capability, training company, multimedia design skills and many other functional units that go into making a full-range IT company.
All these components are available from colleagues in other parts of ICL. Customers are not generally concerned about our internal organisation, and they benefit from receiving a broad offering from a single source.
The channel is mirroring the consolidation that is changing the position of IT manufacturers. With the world's largest companies dominating the market as never before, the second tier and national vendors seem to be struggling against ever larger industry leaders and relentless price erosion.
When the likes of IBM and Compaq give up profit in the pursuit of market share and channel efficiency, it is no wonder that Viglen, Tulip, Olivetti and many others are struggling.
Taking vendor and channel consolidations together, we have a scenario in which the UK and European markets rapidly become dominated by a handful of large IT supply and service companies.
These will be the only ones with the scale and range of capabilities to handle the largest customer contracts, and hardware components will come exclusively from top-tier manufacturers.
All this is happening at a time when stock market valuations of IT companies are outrageously high, so the incentive to float - and thereby be open to hostile take-over - is strong.
IT shares are high-fashion buys, and if you want them you have to pay for the label without worrying too much about the durability. Valuing a company by taking last year's net profit and multiplying by 20 (or even 40) is working as if by magic, but hardly looks like wise long-term investing.
I think the time has come to have a talk with the guys who invest our pension fund - just as a precaution, you understand.
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