First Computer 2000, now Metrologie: in a heady week for channel consolidation, Europe's two biggest distributors have been snapped up by giants Tech Data and CHS Electronics.
With Ingram Micro leading the way, the trio are the dominant players in the global IT distribution scene, with collective annual sales in 1998 projected at $40 billion.
They are better capitalised than European counterparts, thanks to the largesse of Wall Street. And they can use expensively rated paper to buy decent local companies. There appears little prospect of any other distribution outfit emerging as a fourth global force, with the exception of the Japanese-owned Softbank.
Some channel observers are beginning to cry wolf. At Gartner Predicts in Paris last week, analyst Steve Brazier warned that local channel operations could be swamped by the US behemoths. Independents will be cast aside as vendors plump for contracts with the globals. He argues: 'I am not sure the idea of global IT vendors selling to multinational customers using local, privately run intermediaries can continue.'
European vendors could also get squeezed, he says, as global distributors plump for worldwide brands in standard configurations. Last month, Apple UK cast aside specialist Mac distributors Computers Unlimited in favour of under-performing Ingram Micro, in a move that supports the Gartner channel squeeze thesis.
But I think the doom and gloom is overdone. According to D&B Computanet, IT industry credit checkers, there are 600 IT distributors in the UK alone.
Companies such as Widnes-based components distributor Memsolve (#40 million turnover and in business only two years) and Manchester-based VIP Computer Centre (a key player in the legitimate grey market with annual sales of #75 million) show there is a huge world lying beyond the reach of the distributor giants.
In Europe, networking, storage and OEM channel sectors are dominated by local independents. Ingram Micro, CHS and Tech Data find it easier to buy their way into dominance than to order their suppliers to stop trading with local rivals. The CHS acquisition of Karma, a $700 million turnover component distributor, is a model of how it is done. Learning from the mistake it made in merging Merisel Europe into its operations, CHS lets Karma do its own thing.
Also, most vendors will want to hedge their bets. Yes, they will want to do business with the big three distributors, but they will want to spread credit and risk by signing up local companies, some of which are big enough to stand up for themselves. In the UK, for example, Computacenter is more important to Compaq or IBM than any US-owned distributor giant because Computacenter delivers customers, while the big three deliver logistics.This is why Computacenter's distribution operation, CCD, holds franchises with all the major hardware vendors.There is plenty of life left in local European distributors.
Drew Cullen is a freelance IT journalist.
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