Aussie channel still viable despite economic doom and gloom

Recently a number of technology companies released financial results that were below expectations.

On 19 February, Ingram Micro, the world's largest distributor, reported a 13 per cent year-on-year drop in global sales and a 23 per cent fall in Asia Pacific sales for the full year to January 3, 2009.

While the distributor doesn't release local figures, and some falls in sales were attributable to falls in local currencies, Ingram confirmed that all its subsidiaries had seen a slower year.

Greg Spierkel, CEO of Ingram US, claimed the economy dealt the distributor a "tough hand" and that 2009 would be an even more challenging year.

"All regions have experienced economic sluggishness," he said.

"Business confidence is at its lowest point in decades. We don't expect growth for at least the next three to five quarters. If that becomes the case, it would be the longest period [of negative growth] in our industry."

A quick survey of large and small players in the Australian channel indicated that the global financial crisis had not affected their businesses much, if at all.

Despite the warning sounded by Ingram's results, most were confident of riding out the storm.

Peter Masters, director of marketing and operations at Express Data, told CRN that it would be incorrect to infer that Ingram Micro's international results necessarily reflected the situation here in Australia.

Masters claimed there were a number of factors that are applicable to America and Asia that don't apply to Australia.

"The channel in Australia remains strong and ongoing opportunities exist for resellers to sell solutions which increase productivity," he said.

"The world economy is entering uncharted waters, but good business acumen goes unchanged.

"There will be shake-ups in the channel - that is assured - but let's not lose sight of the fact that it also provides us with often unseen opportunities as well," Masters said.

Antony Sheen, managing director at Altech, said Altech had also been affected by the global financial crisis.

"When the exchange rate went down we were a bit slow, but we made up for that and our reaction reflects how much better we are doing in this quarter," he said.

"We basically changed the focus on the products we sell and no longer sell products resellers have no interest in."

Dimension Data reported significant growth in revenue and profit when it released its results in November, said Martin Aungle, corporate communications manager.

"We're not in the distribution business so I guess any kind of correlation with results from the integrator space I think doesn't necessarily match up," said Aungle.

Smaller resellers also said they had so far found little effect of the global financial crisis on their business.

Ian Grieve, part-owner of IT reseller, Computer Ambulance, said the IT channel in Australia isn't slowing down.

Computer Ambulance is based in Toowoomba, Queensland and Grieve claimed the business was booming and sales hadn't slowed down.

Grieve said regional businesses like his were thriving, partly due to the Federal Government's stimulus packages.

Olof Elvingson, owner of NSW-based Avalon Computers, said he had seen business boom in recent times.

"Looks like our segment of home and small business people would rather spend $200-$300 on repairs/upgrades than heading down to Officeworks to buy a new computer system," he said.

"I think "spare parts" distributors like Altech etc. will do alright."

Elvingson claimed the local channel had changed with most small, "mum and dad" retail resellers already long gone from local shopping strips.

Most service and specialised resellers would do OK, in these global economic times, claimed Elvinson.

"Especially if they have a large and loyal customer base," he said.

"We will get a lot of 'budget upgrade' requests to carry people over until [they] know what's over the horizon.

"Also, Microsoft is not helping by dithering over XP-Vista-Windows 7, keeping some people sitting on the fence with their two- to four-year-old XP systems," he said.

Web based retailers and other IT businesses just getting started would suffer the double whammy of higher prices due to the dollar and less demand from customers, Elvinson said.

"We monitor the computer-repair section in the Manly Daily newspaper, and there are a lot more ads by local technicians looking for jobs than six to nine months ago," Elvinson said.