Menu
Industry reacts to Tech Pacific buy

Industry reacts to Tech Pacific buy

Resellers may feel the Ingram Micro acquisition of Tech Pacific in the pocket as their credit lines could be cut in half once the two firms join.

In addition, resellers will also have one less distributor vying for their business, which could mean fewer competitive options for similar products, while some vendors may feel unsettled in the new arrangement.

These are some of the impacts industry sources expect the merger of the country’s two larger distributors will have on the New Zealand market.

Combining the operational and supply chain systems of Tech Pacific and Ingram Micro is also expected to be one of the major challenges faced by the new group. The integration of the two companies is expected to begin early next year, with Tech Pacific being rolled into a new Ingram Micro Asia-Pacific that will be nearly double its current size.

How this will translate locally is still unclear, but competing distributors expect the process to create opportunities for them.

“The biggest opportunities for us will be while they are changing all their systems to fall in line with Ingram Micro. It will be a tough job for them to keep their run rate, while changing that big a business [as Tech Pacific],” says Paul Plester of Express Data.

Chris Rycroft of Dove Electronics says joining the systems of the two companies could be their biggest potential business challenge. However, Plester believes one the greatest challenges for the new group will be ensuring that vendors enjoy the focus they require.

“The new company will follow a broad-based distribution strategy and many brands feel they do not get value for a broad reach approach,” he says.

The major impact on resellers will be a reduction in credit available to them.

“It could effectively remove half of their available credit,” says Plester.

Steve Macmillan of MPA agrees this may be an issue, but says it should not affect resellers that run an effective business.

“Not many resellers will be using credit from two sources to play a cash-flow game,” he says, adding that the channel will have fewer procurement options.

The merger will also create opportunities for other distributors to approach vendors, who may feel unsettled while the merger is being finalised, says Liam Gunson of research firm IDC.

“The transition stage of a merger normally causes some insecurities,” he says.

Macmillan agrees: “Not all vendors will be happy with the change and [some] will probably fall out.”

Overall, the surprise felt by channel sources was more over the suddenness and stealth of the move, than the rationale behind it.

David Charlesworth of Comworth Systems says he had been wondering who would purchase Tech Pacific as it had been on the market for some time.

“It is a logical and positive acquisition,” he says, adding the move should have a significant impact on the New Zealand market because Tech Pacific is such a major player.

“I am not sure it will change the dynamics of the market that much — there will still be specialist distributors and some of the smaller ones may change their thinking and consider partnering.”

Rycroft says the move makes sense on a global scale, as Ingram Micro did not have a footprint in Asia.

Microsoft New Zealand partner group manager Steve Haddock says the move is not surprising in light of the amount of consolidation in the ICT community at the moment.

“New Zealand is a small market, so consolidation naturally provides better economies of scale and better efficiencies — this is especially the case in distribution where massive efficiencies can be gained by increasing volume, while fixed costs remain constant.”

Haddock believes this should have a positive impact for both partners and customers down the line.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Featured

Slideshows

Meet the leading female front runners of the Kiwi channel

Meet the leading female front runners of the Kiwi channel

Reseller News honoured the leading female front runners of the New Zealand channel at the 2018 Women in ICT Awards (WIICTA) in Auckland. The awards honoured standout individuals across seven categories, spanning Entrepreneur; Innovation; Rising Star; Shining Star; Community; Technical and Achievement.

Meet the leading female front runners of the Kiwi channel
Meet the top performing customer-centric Microsoft channel partners

Meet the top performing customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the top performing customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments