3Com targets to hit smaller distributors

Tough revenue targets threaten to marginalise smaller partners as manufacturer attempts to pare down swollen channel

The merged operation of 3Com and US Robotics (USR) could force out small distributors because they are unable to hit aggressive revenue targets as the vendor looks to reduce its number of wholesalers.

According to sources, 3Com, which merged with US Robotics in March, is proposing to set a $10 million threshold in an attempt to pare down its already swollen distributor channel, which currently stands at 12.

But the target will make it difficult for the manufacturer?s smaller distributors to compete against the pan-European players.

Peter Rigby, director of networking and storage at CHS Electronics, said: ?3Com is going to have a lot of problems cutting down the channel ? $10 million is not that much for some distributors, but the smaller ones will suffer.

?Some distributors are better at selling 3Com, while some sell better with USR ? where do you draw the line??

Steve Lockie, general manager of networking at Frontline, said: ?Distributors will need to show that they have the revenue to support 3Com, if not, they will be left to wither on the vine.?

Lockie added that it was unrealistic for distributors to expect to gain double-figure margins on products which were seen to be commoditised: ?If people expect this they should get out. Data Connectivity made a smart move.?

3Com distributor Data Connectivity has already bailed out of the vendor?s channel. Neil Ledger, managing director at Data Connectivity, said: ?We took the decision not to work with 3Com, it was difficult to deal with, had limited margin and with value-added distributors, there was no room left.?

Gail Noble, UK regional marketing manager at 3Com, agreed that differentiating between which distributors to see which fared better was one of the main concerns of its channel strategy, which is due to be announced this month.

She refused to comment on speculation about revenue targets.