European slump slows down Ingram boom
Following last year's high, distributor boss Grambo looks to connectivity and NT products for future growth.
Robert Grambo, European president of distributor Ingram Micro, saidtivity and NT products for future growth. sales growth had slowed in 1999, with the UK having the weakest economy in Europe.
In an interview with PC Dealer, Grambo said sales growth, measured in dollars, was still 'double digit and still more than 20 per cent' but did not match the 70 per cent rise in sales last year.
'Business is going very well but has slowed from last year when it was unbelievable. Last year, it grew at 70 per cent - that is not continuing this year,' he said. 'There are three issues: the economy in Europe is not very strong and the UK is weakest. Then there is the year 2000 problem.
A lot of companies are focussing on this rather than on infrastructure.
'The third factor is that the average selling price has declined. Even if units grow at historical rates, revenues don't grow at the same rate,' Grambo added.
However, he claimed Ingram Micro was outperforming IDC's forecast of 15 per cent growth in units sold and flat revenue for the first quarter, predicting that the group's sales and profit would increase this year.
One area of growth for Ingram Micro sales is connectivity products, such as internet, intranet or internet telephony products which merge voice with data, Grambo added, with products from Cisco doing particularly well.
Growth in products linked to Microsoft's NT operating system was phenomenal and on a par with connectivity products, he said.
Ingram expects more organic growth after last year's acquisition of Macrotron, but is evaluating acquisition possibilities in Poland, Hungary and the Czech Republic.
Grambo claimed that the arrival of the European single currency in January has not had much impact, but manufacturers will have to sort out their different pricing policies.
'There are different euro prices in different countries. Once that is solved we will see greater use of the currency,' Grambo said. He added that Apple had already adopted a single continent-wide euro price and other vendors were moving as quickly as possible to follow suit.
However, the clearer comparison will not necessarily bring about lower prices. 'That is hard to predict due to the number of factors that come into play. We are doing all we can to rationalise the market and pricing,' he said.
Direct sales by manufacturers to users, such as over the internet, were 'competition, but also an opportunity', Grambo stated.
'Dell, for instance, is a big customer of ours. It is a reseller with a large, successful business model. It needs other products for its customers like other resellers need products to complete their packages,' he added.
Grambo said Ingram Micro supported Microsoft in the ongoing US anti-trust trial and sees no reason to break up the software firm.
'We are very supportive - our opinion is that Microsoft has been a good partner and we have not seen any behaviour that raises concerns about anti-trust,' he said. 'Ingram Micro is Microsoft's largest customer and we have not experienced what the US government has brought against Microsoft as concerns or issues.'
Grambo insisted he did not see any lack of competition in the industry and the recent merger of Netscape and AOL and the valuation of internet companies was evidence that competition was thriving.
He remained tight-lipped about the distributor's plans for channel assembly.
As revealed exclusively in PC Dealer (14 April), Ingram Micro's European build-to-order strategy has stalled due to incompatibility between its proprietary information and operations management system and the one it inherited from the Tulip plant it acquired last year.
The distributor admitted last week that its build-to-order operations had been postponed until the middle of this year.