Ingram Micro Sets Up PC Distributor : Marketing: The computer maker is expected to sign a distribution deal with major brands. The goal is more prestige, sales.
In another sign that personal computer manufacturers are rethinking the ways they get their products into customers’ hands, Ingram Micro Inc. said Friday that it has formed a new division to distribute major computer brands.
Chairman Linwood (Chip) Lacy said the new division will sell major computer brands, though he wouldn’t disclose which ones. Analysts speculated that International Business Machines Corp. or Apple Computer Inc. would likely sign distribution deals soon.
“We wouldn’t be doing this if there wasn’t something to announce soon,” he said. “If a major manufacturer went through a distributor, it would be a major change in our industry. I wouldn’t leap to that conclusion yet.”
Even limited distribution of product lines made by major PC companies, such as Apple, IBM or Compaq Computer Corp. could mean a big boost for Ingram Micro’s prestige and sales, said Susan Scott, analyst at Merrin Information Services Inc. in Palo Alto.
In the past, major PC makers have avoided selling through distributors, which they have generally viewed as middlemen who reduced the manufacturers’ control over the type of dealers who sold and serviced their products.
Ingram Micro, based in Santa Ana, built its roughly 25% share of the $5.5-billion PC distribution market on the growth of smaller personal computer makers such as Advanced Logic Research Inc. in Irvine.
David Dukes, Ingram Micro’s president, said the company has long sought the right to distribute major computer brands to authorized dealers, and he said the company has focused on improving its technical service.
He added that turmoil in the computer retailing business and increased consumer demand for low-cost computers are causing PC makers to rethink their sales strategies.
“If they (major PC companies) were happy about market share, they would not change their distribution,” Dukes said. “Now they want more, and the distribution industry is one option.”
Some big PC makers have already begun to go beyond their circle of authorized dealers and are now selling their wares through high-volume retail chains known as “super-stores,” analysts said.
The big companies have been reluctant to talk about the distributor issue, perhaps because such a move could strain relations with their traditional authorized dealers, who fear losing sales to other distributors.
But compromises could be worked out to allow the authorized dealers to resell computers exclusively to some smaller dealers as well, analysts said. The distributors would also assure that they would sell only to authorized accounts.
The major manufacturers are cutting their costs, and they are finding that smaller authorized dealers require more attention than they can render, said Scott, the Merrin analyst. The distributors would likely be able to deliver small quantities of products to such dealers faster than the manufacturers, she said.
“Distributors were viewed in the past as dirtying the product,” one source said. “Now that computers are commodities, there’s no reason that they can’t be used to reach additional markets.”
Ingram Micro also formed a consumer products division to supply low-cost computers to mass marketers such as Sears, Roebuck & Co., consumer electronics stores, warehouse clubs, office super-stores and computer super-stores.
And in another development, Ingram Micro said it has acquired Mirai Networks Ltd. in the United Kingdom and plans to merge with another U.K. subsidiary, WinPrime Group, which was acquired in April.
