Ingram Micro Seals Distribution Agreement : Computers: Santa Ana firm adds Compaq to its list of major manufacturers, along with Apple and IBM.
Climaxing two years of negotiation, computer distributor Ingram Micro Inc. on Monday said it has obtained an agreement to distribute computers made by Compaq Computer Corp.
The deal is a culmination of Ingram Micro’s plan for quick growth in the fast-changing computer distribution industry by distributing products made by all the major brand personal computer manufacturers, including the three largest--Apple, IBM and Compaq.
“This completes the cycle,” said David Dukes, co-chairman of Ingram Micro in Santa Ana. “It’s a recognition of the key role that distribution plays in the computer industry.”
After years of selling only computer clones, or imitations of brand-name computers, Ingram Micro signed distribution deals with Apple Computer Inc. and International Business Machines Corp. in 1991.
But Compaq balked at a deal, signing instead with the distributor’s arch rivals, Merisel Inc. in El Segundo and Tech Data Corp. in Clearwater, Fla. Since then, Compaq has repositioned itself as a maker of low-cost computers for general consumers. It now wants to reach for new markets beyond its traditional retailers and customers.
“It’s a milestone for both companies,” said Ross Cooley, senior vice president for North America at Houston-based Compaq. “It’s been a long time in coming.”
During the past several years, other computer manufacturers have signed pacts with Ingram Micro and other distributors because of the rapid acceptance of the personal computer in homes and small businesses.
Previously, manufacturers had worried that in a market limited to larger businesses, use of a wholesaler would not expand sales but would simply shift them from one type of vendor, such as small computer stores, to another, such as mass merchandisers like Sears, Roebuck & Co. Broader market acceptance, however, ended that threat and proved a boon to fledgling distribution companies.
Distributors also benefited from price wars in the computer industry. The need for profits drove computer manufacturers to look to the distributors for services they could no longer afford to provide, such as stocking big inventories, expanded customer services (technical support) or configuring computers in custom settings.
Those industry changes helped Ingram Micro grow dramatically during the recession.
Dukes said the company added 250 employees in Orange County this year, and now employs about 1,250. He predicted that the company will add another 250 employees in the next year, partly through expansion of its computer systems unit and also through the addition of a computer service center.
Dukes estimated that Ingram could sell $120 million to $150 million of Compaq computers in the first year, making it Ingram’s second-largest vendor. Microsoft Corp. is the largest. He said Ingram would start distributing Compaq machines to dealers as early as next month.
Under a policy announced earlier this year, Compaq dealers can now get computers from other sources only if Compaq cannot supply them fast enough.
Ultimately, Dukes expressed hope that such restrictions would disappear throughout the industry, allowing any wholesaler or vendor to do business with anyone else.
Overall, Ingram is expected to post sales of $4 billion for 1993, up from $2.7 billion a year ago. Dukes predicted Ingram could hit $5.4 billion next year. The private company does not release profits.
