Networking gear vendor Netcomm has wound up its relationship with distributor Bluechip Infotech and taken on LAN Systems in a quest to grow share through “value-added” distribution.
David Stewart, managing director at Netcomm, said the decision to cut Bluechip had been partly “performance-based”.
Also, Netcomm wanted to focus on more “value-added” distribution to help it build market share for its more complex products, such as IP cameras.
Bluechip’s five percent share of Netcomm’s total business had been shrinking, he said.
“It’s been an agreed shut-down [of the Bluechip relationship] over the last three to four months, doing stock reduction,” Stewart said.
“Bluechip didn’t end because of LAN Systems but it was the net result.”
Stewart said Bluechip was more of a “time and place” distributor.
However, Bluechip Infotech managing director Johnson Hsiung said Bluechip had been the one to end the Netcomm relationship.
"The sales of Netcomm's gear are not that significant. And we already have two data communications vendors -- D-Link and ZyXel," he said.
Hsiung said Netcomm no longer led the market but D-Link and ZyXel were both contributing to overall growth for Bluechip's business.
"We thought we'd better focus on those two data companies. So actually we told Netcomm we wanted to end the relationship," he said.
Bluechip had informed the vendor of the decision before Christmas, Hsiung said.
Netcomm had inherited the Bluechip relationship when the latter bought out BBF in late 2003. BBF had worked with the vendor for more than a decade, he said.
Netcomm also worked with broad-based distributor Tech Pacific -- now Ingram Micro -- and Queensland distributor ITW, which Stewart described as “a bit between value-added and broad-based distribution”.
“We believe we need the value-add. And I don’t think there are too many value-added guys out there that have got the spread,” he said.
Netcomm hadn’t gone through a formal process to select LAN Systems. But Netcomm believed its newest distributor had a strong engineering background, Stewart said.
“They understand the technology,” he said. “They have engineering staff. They can assist a reseller to deliver knowledge.”
He said Netcomm’s more complex products -- such as IP cameras, wireless hotspots and higher-end ADSL gear -- required help from the channel to properly deploy.
“When you’re dealing with an IP camera [for example], it’s more about how you set it up,” he said.
Wendy O’Keeffe, general manager at LAN Systems, said in a statement that Netcomm would help it build its appeal to SMBs.
“The SMB market is ... critical to our growth strategy for this year,” she said.
O’Keeffe said Netcomm’s IP cameras, in particular, dovetailed well with LAN Systems’ focus on the lucrative and fast-growing security market.
LAN Systems would also distribute wireless, VoIP and other networking gear from Netcomm.