Confessions of an entrepreneur

For 27 years, the Japanese printer vendor presence in Australia was closely associated with one man - entrepreneur Stead Denton. Last year Denton's company, IPL Group, sold its 30 percent stake in the local branch back to the parent.

The decision to sell came after increased competition from other vendors started eating into the profitability of the local business, says Denton.

"We punched above our weight - we managed to maintain our market share as in other developed countries so we did ok. But to compete it's difficult. We have to trade as an independent company and be profitable locally. That's why I suggested they come here.

"I said to [head office] last year, all of my competitors are factory subsidiaries. I think factory subsidiaries, their principle concern is to keep the factory turning.

"They were prepared to leave me here forever, I guess, but it wouldn't be fair to them. They've been very kind to me for the past 20 years, me volunteering to step aside was the least I could do."

Now back in the hands of the parent company, the local arm can take more longer term strategies in government and corporate, says Denton. "They could decide, like my competitors do, that they could take a strategic decision. Distributors don't have that luxury - you can't do it and remain viable."

Oki establishing its own presence in Australia is going to be significant, says Denton.

"I'm convinced that their market position and market share will certainly strengthen. The guy they sent over to be managing director, [Takaaki] Hagiwara, we refer to him as Huggy, will lead Oki into bigger and better things. Oki is a major player, particularly in Europe and Japan. Their technology is pretty good. They will survive."

Hagiwara, who used to run the Singapore operation, has moved to Australia to oversee its expansion.

Read on for the Panasonic deal.

The sale went through on 1 December last year, and Oki retained IPL's 10 employees in that division. Oki Australia will stay in IPL's premises in Sydney, Brisbane and Melbourne for the next year until it can sign other leases.

"It's been a field day for the lawyers and accountants," says Denton.

 "After having been a business partner for 27 years it's been emotional. I was in Japan last week when the president of Oki gave me a farewell ceremony which was lovely; all the senior Oki executives attended," says Denton.

At the ceremony Denton was presented with an unusual present, a box with a pair of cranes in silver, with the engraving, "In recognition of service to Oki in the Australian market".

"Then we went out and had 3,000 sakis. It was an emotional moment for me," confesses Denton.

On the day that Denton sold out of one company, he bought into another. IPL, which has a separate division in communications selling brands such as Alcatel and Siemens, took over distribution of Panasonic Australia's IP Telephony range in Australia.

"We will be a purely communications company now, whereas before we had a leg in both camps," says Denton. However, the transition was smaller than some would expect. While Oki is mainly known in Australia as a printer company, in Japan its main business is telephony.

Denton says Oki is the number one IP PBX vendor in Japan, and the vendor makes carrier-grade infrastructure products which subsidiary IPL Communication has sold to Optus and AAPT in Australia.

IPL Communication, which has picked up 10 Panasonic staff, was roughly the same size as the OKI business, says Denton. He says the fact that IPL is dealing with another Japanese company, this time a $100 billion giant, is no coincidence.

"To be quite honest I think I half think in Japanese. They are very logical, there are no two agendas with the Japanese. I've dealt with Korean, Japanese, German and French over the years ,and the Japanese are far more logical to deal with.

"They have a far better understanding of who they are and where they want to go. I always gravitate towards them."

Panasonic's decision to go with IPL marks the first time the vendor has moved away from supplying the channel directly. Denton calls it a "bold move", and says the interview process took "many, many months".  "We spent a lot of time in the due diligence."

One reason for the move to channel was the transition from analogue to IP telephony, says Denton. The majority of phone systems sold in Australia are still analogue keyphone systems, of which Panasonic has an 18 percent share.

The vendor is also the number-one seller of handsets in the world, claims Denton. "Panasonic have a great brand name in Australia," he says.

Read on for Panasonic's plans in Australia.

While the volume is still in key phone systems, the dollars are in the PBX "which is where Panasonic wants us to position them," says Denton.

The gradual growth of IP telephony also means resellers need to have a different range of skills, on the sales as well as technical side.

"When you go to IP telephony you're pretty much selling software and the telephone is a platform that makes the business more efficient and more productive.

"IP telephony is no longer a standard product, it plugs into the data network. So the skills are far greater than just selling a key system, you do need system integration skills. And the sales process is more complex."

Denton says he has watched the convergence in IP telephony with interest - Nortel, 3Com and Tandberg have recently fallen to Avaya, HP and Cisco respectively. However, he says that "not too many vendors truly get it". "You can read their data sheets but when you start to integrate it, it doesn't work. There are very few vendors that truly understand application software sitting on an IP platform and can make it work with an existing data network.  understand IP telephony and how it fits into a customer's business.

"When you try to integrate it, it doesn't work. That's why IPL has more engineers than sales people. We spend more time integrating than selling.

"Although many people think they can there aren't that many that can," says Denton.

As Denton closes one door behind him to walk through another, he says he still loves running a sizeable distributor in the Australian IT channel.

"I'm not that far from 60 but I love this; sometimes I think I'd pay to come into work. Truly you don't get too many opportunities to sell a business and take a new one on, both of substantial size and quality, in a lifetime. And they both happened on the first of December."