2010 in review: Industry gears for positive change

2010 in review: Industry gears for positive change

This year was all about consolidation. We saw mergers, restructures, a few receiverships and lots of people shifting companies and roles, all in a slowly recovering economy. On the one hand, the high dollar kept IT imports affordable, while on the other, the GST rise slowed growth. The IT game itself was fairly steady.

While there were no major technological breakthroughs (2009, for instance, was the year of the cloud) the rise of smartphones could be the harbinger of a much more pervasive influence of IT on every aspect of our lives. But the chilling appearance of the allegedly state-sponsored Stuxnet worm shows that it is still a jungle out there. Here in New Zealand, however, the benefits of a high-tech society far outweigh the threats.

People on the move

This year it seemed as if there were people coming and going constantly. Renaissance has been especially dynamic. The year opened for the company with the appointment of Richard Webb as the new chief executive. Next, Jan Paterson, long-time general manager of the Insite assembly business unit, announced her resignation as it moved the company’s assembly operations from Christchurch to Auckland.

However, good people are always in demand and Paterson was quickly recruited by UC/voice provider Connect NZ to lead its Christchurch branch. This was followed by industry professional Doug Casement’s appointment as chief information/innovation officer in March. And, to complete a circle, Warwick Grey returned to Renaissance in August. “It’s 21 years since my brother Trevor and I started the business and … now seems like a great time to return,” Grey said.

Renaissance, which is in the process of consolidating all of its various units under the ‘Yoobee’ brand umbrella, has also seriously upped headcount in its contact centre and support teams.

Connector Systems also hit the headlines with major changes in staff, starting at the top. In March, it was announced that Dale Smith had formed a new company to acquire their assets from the Gurr family who had operated the firm for 30 years; Smith took over the reins as managing director.

Shortly thereafter Smith announced the appointment of highly-respected industry veteran Mark Dasent as group general manager. Dasent, like Paterson, made his name with Insite and then moved up with Renaissance after the acquisition of Insite a few years ago.

Connector Systems also brought over Kevin Swainson to head up their telco division and Arunima Dhingra to assist with marketing communications; both came from Renaissance.

While all this was going on, the IT revolving door didn’t miss a beat. In October, Simms International brought on Vaughan Nankivell, who had been picked to be Kingston’s country manager in April, as corporate and enterprise general manager.

Steve Haddock returned to our shores after five years working with Microsoft in Europe and Asia - his new job title is business group lead of server and tools. And there was a shift at the top for Microsoft as well: Paul Muckleston replaced Kevin Ackhurst as managing director in September.

Other seasoned professionals changed companies during the year. David Tse signed on with IBM to grow their healthcare business, while Steve Ford assumed the leadership role at Belkin.

Vivienne Larsen was recruited to a channel management position at Avaya; and Convergence appointed Ken Fairgay to help them move into the cloud.

This year also saw the departure of a few industry veterans. Kerry Wood, one of the more colourful personalities in a somewhat monochrome industry, left Quicken in March to join a division of Fletchers. He was replaced by long-time second-in-command Katie Cotcher. Callum Eade left Lenovo in April and Catherine Blinkhorn, who helped Integral/Axon win successive IBM Business Partner awards, stepped down in August.

And it wasn’t just people who moved on. Radiola, a company in business since 1913 and long-time Samsung distributor, stopped trading in March. Morning Star dipped into receivership in June. Tech Master, one of its subsidiaries, took over some of the remaining operations soon after. Checksun New Zealand followed Morning Star into liquidation in August. It had been operating locally since 1995.

Express Data made the country proud when it was named Distributor of the Year at Microsoft’s global partner conference in Washington DC in July. The company beat out more than 9300 partners from 125 countries. Well done to Paul Plester and the team, and also to country partner Intergen.

Industry trends

We saw a steady move towards economic recovery this year, by and large. The industry shrugged off the doldrums and showed signs of life. IDC kicked off the year with numbers that saw the printer market rebounding to 2008 levels after a poor 2009.

In April the research organisation expected the Asia Pacific region’s spend on infrastructure management software would grow by about 12 percent in 2010. It also tipped PC sales would rebound in 2010, with a 12 percent rise this year followed by 7 percent growth in both 2011 and 2012. That was a spot-on estimate, as Gartner’s numbers showed a 10.5 percent increase in sales for the third quarter of 2010 over the previous year.

Gartner also had some other good news: In March it announced server sales in Australia and New Zealand had grown 21.4 percent year-on-year in Q4, 2009. It also predicted overall IT spending in Asia Pacific would hit US$570 billion in 2010, up 10.7 percent on 2009.

Frost and Sullivan was bullish this year. In September it pipped videoconferencing in ANZ to pass the US$100 million by 2016. It has also predicted smartphone sales will grow by so much that, in 2015, fully 54 percent of all devices sold in the regions will be smartphones, an increase of 49 percent over 2009. And don’t forget security.

It noted that the secure content management market will grow by 15.9 percent in ANZ this year.

Springboard research also had positive things to say. The company reported in April that the trans-Tasman market for SaaS would expand by 45 percent this year.

But, according to the laws of physics, what goes up must come down. Monitors are a case in point. Sales were down 13 percent in Q3, 2009.

Even though the number of units sold grew steadily in 2010, recommended retail prices were down more than 30 percent during the past three years. This was good news for buyers but hard on resellers.

Surprisingly, Microsoft’s stranglehold on the browser market – which it has dominated since blowing away Netscape in the early ‘90s, - has dipped below 50 percent market share. Firefox has 30 percent and Google Chrome tripled its share in a year with slightly more than 11 percent. This must mean that the PC consumer base is reaching a whole new level of sophistication and are willing to invest a bit of time and effort into managing their computers in a safe and reliable manner.

Business goes on

Just as there were plenty of market statistics for the industry itself, Reseller News kept readers updated with local performance as well. Dick Smith Electronics set the tone in January by announcing that while revenues were up 6.5 percent to $361.9 million, gross profit was down to $88.6 million, still pretty good. It currently has 77 stores in New Zealand. Datacraft’s profits were also down, reporting an after-tax net profit fall of 37.6 percent to $972,000 for the year to 30 September 2009.

On the plus side, Distribution Central grew their 2009 revenues by 22 percent, turning a $24,500 loss into a $466,000 profit. Dell also turned it around with an after tax profit for the year ended January 2010 of $483,642, up from a loss of $335,880 for the previous corresponding period. It was the same for LG’s local operations with revenues up 77 percent to $86.7 million.

Cellnet bounced back in 2010 with a net profit of A$1 million for the first half of the year and expect to follow that up with profits between $1.8 and $2.07 million for the second half. And accessories distributor Anyware increased revenues to $2.57 million for the year to March; CA’s local arm boosted profits from $862,000 to $2.70 million; and Hitachi Data Systems grew revenues significantly in the year to June by 61 percent to reach $4.62 million.

Agencies were also on the turntable as vendors and distributors jockeyed for space in a crowded market. Simms International picked up the Dell product line of notebooks, PCs and servers in February and followed with IronKey secure portable storage in October. Connector Systems inked a deal with Sanyo to distribute their surveillance cameras, a fast-growing segment of the market, and data projectors.

They followed that with a similar agreement with FalconStor’s range of software-based data protection offerings. Ingram Micro became the third distributor for LG to move their monitors and optical storage into the retail space; they also picked up Swann’s surveillance cameras, an agreement with Skyzer and Ingenico point of sale solutions and the big one, Apple rights in October.

Vendor and distributor trade shows represent great value for the reseller community. Ingram Micro’s Showcase drew 54 vendors and featured well-attended seminars. Unfortunately, the Christchurch leg was cancelled due to the earthquake in September. Datastor’s Forum, held at SkyCity mid-year, drew large crowds and Eagle’s inaugural ‘Talk and Chalk’ trade show earlier this year was so successful – with 29 vendors and 500 attendees – that it will become a regular event on the show calendar.


What can we expect to see next year? Probably more consolidation as companies look to maximise revenues through economies of scale.

Smartphones will become more ubiquitous and social media might be harnessed for more business applications. Well-run business will thrive and a few borderline cases will fold. But, in the background, well-trained and highly-skilled professionals will ensure that IT continues to be a successful industry and contribute significantly to the economic wellbeing of our country.

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