The New Ingram

Baillie does not believe that other distributors will find it difficult to compete against the new beast. 'We're not going to change - they'll get the business the same way that they have in the past. They'll find it easier to compete with us because people [resellers] will say, "Tall poppy syndrome, we'll go and give some business to the little guy. A big American company - they don't need our business!"

'Whereas before I think two years ago the market used to see Tech Pac as an Australian company trying to do a good job. We're owned by Ingram Micro but the staff stay the same, they're all Australians working here.'

Despite creation of a big broad-based, one-stop shop for the reseller channel, Baillie says there will always be a place for specialist distributors that do a good job. 'Then the resellers have a choice. Sometimes they use a specialist distributor and sometimes they use a broad-based. At the end of the day, as long as they get their goods at the right price at the right time, it doesn't matter where it comes from.'

Other distributors have mixed feelings about the future of the market following the acquisition, but seem positive about the result nonetheless.

Ross Cochrane, general manager at competing distributor Express Data, says the merger is not a first in the market - Merisel and Tech Pacific came together back in 1997.

'In general terms, the market adapted around it and kept going. From my perspective, the [merger] will be a positive thing. Resellers are generally always looking for choice in the marketplace.'

For Express Data - a so-called value added distributor with a focus on high value markets like networking and security - the merger represents an opportunity for it to differentiate with products that have not been  commoditised. 'We've got a more specialised model, there's an opportunity for us to target resellers that are looking for a technology-oriented supplier,' Cochrane says.

Although the market is showing signs of life, Cochrane agrees that smaller distributors will suffer as a result of the buyout. 'Ingram will add more and more vendors and will target more commodity-type vendors. It's going to be very difficult for them [smaller distributors]. The buying power pressure that Ingram will put on vendors will ensure they'll have a competitive advantage in the marketplace. You've got to be good - the stakes are raised and it's not easy game anymore,' he says.

As with any merger there is a risk involved and, worst case, the combined operation could go from profitable to losing money. 'Their management has got the experience - they know the game, but it's not a walk in the park. If they do a great job, they can make it work,' Cochrane says.

He expects that there will soon be more consolidation in the distribution channel. 'There's still a number of guys that have to decide whether they are in it for the long haul - they've got to make a call.'

Currently, Express Data resellers are making sure they've got alternative facilities for supply and credit with the distributor, given the uncertainty about how the Ingram/Tech Pacific marriage will shape up over the coming months. 'I don't think we're actually seeing the new Ingram. Until they come together, everyone is still uncertain. Tech Pacific has been viewed [as taking] the superior position - it will be very interesting,' Cochrane says.

Niels Kofahl, a director at small, niche distributor Tecksel, says the Ingram/Tech Pac marriage would impact positively on his business because there will be less choice available for resellers. 'And Tecksel as a distributor is a viable choice for a lot of businesses. We're flexible and we can work faster than the giants.'

Kofahl claims that the 'bureaucracy and red tape' will be enormous for the new Ingram and the competition will take full advantage. 'There are enormous opportunities for distributors like ourselves,' he says.

However, he says that Ingram's plan to duplicate Express Data's low-cost Express Online service was a smart move. 'This is unfortunately the way it's going as products become more commoditised; there simply isn't the margin there to offer the full service,' he says.

Kofahl says the combined entity was likely to exercise its market power once the integration was complete and would need to be 'closely watched'.