Editorial: Not that lucky online

This week, PC Dealer runs a feature on how the leading vendors are approaching business online. Channel issues don't come bigger than this. How the likes of Compaq, IBM and Microsoft manage the shift towards ebusiness - namely direct web sales and online trading partnerships - will have live or die consequences.

It's instructive to consider how vendors differ in their approaches.

Compaq has been much derided for its composite channel policy, but things are a little clearer following the announcement to sell Prosignia over the web. By comparison, IBM seems to have postponed becoming a full ebusiness, in spite of having popularised the term.

But who are the real losers in the ebusiness game? The common view is that distributors are likely to find themselves squeezed between a rock and a hard place as web trading takes off. After all, isn't the whole point of online trade simplicity and directness?

The reality looks even more harsh for the wholesale sector. There's every chance that many distributors may not be around by the time ebusiness is a serious force. Many seem to be rushing to commit suicide in advance of this eventuality, their headlong rush owing nothing to the internet and everything to basic economic law.

Osmosis and Principal, bastions of economic strength a year ago, are now consigned to the dustbin of channel history, with nothing but battered reputations and disgruntled ex-employees to remember them.

And take CHS. The company has impeccable ebusiness credentials. It has made a serious go at leading the market in web-based relations with its customers, but this must be of little comfort as it faces up to what looks like being a torrid few weeks.

CHS has made some classic business errors and it looks as though it may end up paying the ultimate price. It sought quick expansion through acquisition to compete with the big boys, but it didn't consider that the big boys really were much bigger than it, with power bases in the world's most important IT market, the US. It might have been better entrenching itself around areas of profitability to weather what many are predicting will be difficult times for distribution.

Now it faces possible buyout perhaps, ironically, by a US firm and subsequent meltdown.