Toshiba UK's distribution model has never been typical of other IT vendors, and now it’s not even typical of itself.
Over the past eight years, ignoring standard practices in the UK market, Toshiba has resolutely insisted on nurturing a one-tier distribution model.
Despite even its own European counterparts' use of two-tier distribution, Toshiba UK has essentially ignored the big distribution names such as C2000 and Ingram Micro, in favour of hybrid distributors like CCD (Computacenter's distribution arm), ETC and ICL Multivendor. - businesses which sell direct into user organisations as well as to smaller resellers.
But its stoical stand against using the broadliners has been defeated, and Toshiba's full range of computer products, including notebooks and desktops, will now also be available through Computer 2000 (C2000).
So why change distribution policy now? Alan Thompson, director of the PC division of Toshiba UK, said: "Within the last two months we've seen ICL Multivendor defocusing from distribution, and Elcom being bought, so hybrids are being concentrated in fewer hands.
“We're also aware of a Europeanisation of customer activity and virtual trading organisations, and that we need to be in a position to deal with international customers.
“These things can be provided by C2000, plus logistical support. Of course we'll be listening to our customers and we want to keep faith in the channel."
Thomson adds that as Toshiba is now running a much thinner distribution model - i.e. handling three days’ worth of inventory as opposed to the previous one month's worth - it means that "Product is absorbed as soon as it's out there. If resellers haven't got it, they need to go to the channel to get it, and some see hybrids as competition. C2000 will be neutral territory.
“This isn't a knee-jerk reaction - the pressure has been building for some time. No deep animosity has been shown by our hybrid partners towards C2000's appointment. We haven't struck any special deal with C2000, they're on the standard contract we have with all our distributors."
Although Thompson states animosity between its hybrids and C2000 does not run deep, it doesn't mean there isn't any.
Mike Jones, general manager at CCD, said: "I'm disappointed with the announcement. There are lots of Toshiba distributors in the marketplace already, and the only key differentiator will be price.
It will obviously result in price erosion, through attempts from C2000 and others to secure their position in the market. The easy option will be to throw the margin away for the sake of a deal, but we won't do that."
Jones also puts Toshiba's move down to pressure from C2000: "C2000 has been pushing at Toshiba's door for a while and trying to get a deal in the UK.They've asked so many times, I guess it gets harder to say no."
An eye on SME
It's true that C2000 has been courting Toshiba: the company’s UK MD, Graeme Watt, revealed that he's been working on a deal with Toshiba for the past two years. But whatever conspiracy theories may be sprouting, as with any vendor, incremental sales and increased market penetration is the name of the game.
Toshiba has made no secret of the fact that it wants to increase its presence in the SME market. And the new distribution deal can be seen as a reflection of that and the realisation that hybrid distribution was no longer achieving its marketing objectives.
Toshiba is eager to brand itself, not only as a number one notebook manufacturer, but also as a total hardware solution vendor for businesses, so pitching itself against the likes of IBM, HP and of course Compaq.
C2000 can offer it the means to do this because it has a comprehensive SME programme, which Watt says Toshiba is "anxious to get on to", and it has a broad range of products. Toshiba, although the big cheese in notebooks in the PC sector, has done virtually nothing.
"And the same can be said for its presence in the server arena: the only way to make any impact here is through the trade distribution route. If the company can succeed, then on the back of the servers it can bring in its PCs and notebooks.
But while Toshiba has clear ideas about what it expects of C2000, what C2000 wants to concentrate on may be a different matter. As Brian Burke, Dun and Bradstreet's Computanet manager, points out: "C2000 obviously wanted to get a brand name like Toshiba on board and particularly wanted the volumes that it can bring with it, but the latter is mainly gained through Toshiba's notebooks.
“Toshiba, on the other hand, wants C2000's concentration to be on its PCs and servers, which are not so commercialised. So it depends on what C2000 can do with the deal, but I imagine PCs and servers are not what's whetting its appetite."
Whether Toshiba will appoint another broadline distributor is yet to be seen. Thompson claims that any distributor interested in carrying the Toshiba product range will be given a fair hearing, just no special deals.
See PC Dealer 8 September for Q” results of Tech Data, the parent company of C2000.
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