Services giant ICL has pulled the plug on its trade distribution arm, killing off one of the oldest players in the supply field.
The unit sat within ICL's Multivendor division and generated £60m worth of annual sales. It sold machines from IBM, Compaq and Fujitsu. The Multivendor division will continue to focus on services and sell purely to users.
Eric Roth, manager of market intelligence at ICL Multivendor Computing, told vnunet.com: "Distribution doesn't fit in with ICL's business model. Gross margin has dropped considerably. Even specialists such as Tech Data and Ingram Micro are having great difficulty in making margin. Frankly, this is not a game we want to be in."
ICL first entered into trade distribution in 1992 when it bought Technology Plc which also included a reseller arm. At the time, rival vendors were dismayed that ICL had managed to buy a leading force in distribution.
Roth admitted that distribution was a substantial business when ICL bought Technology plc, but said the services house was not prepared to make the significant investment needed to maintain this.
Roth denied that the closure of the distribution arm was connected to its Sun distribution arm, Tplc, which will continue to operate as a separate division. There are suggestions that Tplc is close to losing its exclusive position as UK distributor for Sun servers and workstations.
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