HP drops eXeed, Digiland, adds Avnet

HP Australia has finished restructuring its distribution channel, dropping eXeed and Digiland as authorised distributors and adding Avnet Partner Solutions effective November 1.

Under the new structure, Ingram Micro and Tech Pacific have been re-appointed as broad-based distributors with access to most of HP's product lines, while Dicker Data will handle everything save HP Imaging and Printing Group (IPG) products. Avnet Partner Solutions and Express Data will focus on pushing high-end servers and storage products. Lynx Technologies will specialise in storage while Synnex will move IPG products only, said Tony Bill, vice president of HP's personal systems group (PSG).

The review began in July when HP invited some 12 new and existing distributors to put business propositions to the vendor. According to Bill, HP assessed distributors on their ability to drive and sustain growth and their geographical coverage. It also considered each distributor's credit lines, stocking, demand generation and account management capabilities, he said. 'We looked at their ability to develop HP products and services into new markets.

'We are not renewing contracts with Digiland and eXeed,' said Bill. 'eXeed has a good business model and has taken on other vendors. Based on the criteria we used to evaluate [distributors], the three we've chosen are going to give us the best coverage. At the end of the day, we have to do the best thing for HP.'

He added that each selected distributor is addressing each of the 800,000 companies in Australia not considered to be corporate enterprises.

Bill said HP wasn't 'playing in all the markets that we should be playing in'. He cited the thriving white-box and high-end Unix area as markets where HP could pick up share. Bill claimed HP was taking at least a 1 percent share from the white-box market every quarter.

He said that other branded vendors had traditionally left the white-box market alone. 'It used to be a price/point thing - [but] we've got a box out there for $899 (without monitor),' he said, claiming that HP 'leads the low-price band'.

Michael Bosnar, MD at eXeed, said that eXeed would continue to source HP products through other distributors. He was surprised that even after the review, there were still seven distributors. 'It won't be a direct procurement situation, but we will be buying through other logistics partners,' he said.

He said eXeed had been buying HP via other distributors for the past three to four months due to problems with the vendor's backend systems. 'We don't want to hold lots of stock, which is how [HP] operates. Their backend is not ideal and they rely on their distributors to stock lots of products - we're not prepared to do that,' he said.

Earlier this month, eXeed added Fuji-Xerox Printers, Acer Computer, Fujitsu Servers and Emerson UPS to its distribution books. It also acquired a swag of branded products from Digiland a few weeks earlier. Bosnar expected to add another four vendors soon.

He claimed that HP won't take share away from the white-box market. 'It will never happen. You can make two to three [percentage] points on HP. The white-box [resellers] are making 20 points plus. How can you convince them to sell branded products when they're making single-digit margins?' he said.

eXeed did between $5 million and $6 million in HP sales per quarter. Bosnar said this number would drop by around 25 percent as a result of the changes. 'Having a broader [product] offering gives [us] less sensitivity to one vendor,' he said.