Channel Accent

Ingram's ready to Pac(k) a punch

Ingram Micro's recent acquisition of Tech Pacific is an interesting strategic fit and is expected to create a product portfolio that will strengthen Ingram's IT distribution arm in the Asia-Pacific, says Venkatesh Ganesh

Consolidation is the name of the game. Whether it is Oracle eyeing PeopleSoft or Microsoft’s reported intent to acquire SAP, you find IT giants are on the prowl for acquisitions. One such giant in the 'channel' or IT distribution space is Ingram Micro which recently announced its intention to acquire Tech Pacific for a consideration of approximately $493 million.

Double or nothing

The biggest benefit of the acquisition is that Ingram Micro Asia Pacific will nearly double in size in terms of revenues. Customers will benefit from the combined and complementary product portfolios of the merged entity and its strong vendor relationships.

So, what does that mean for the Indian market? Says an Ingram Micro spokesperson, "With this acquisition we can consolidate our leadership position in one of the hottest emerging markets." Tech Pacific had always been seen as a less aggressive player and coming together with Ingram could help it shed that image.

Both companies have a diverse product portfolio mix consisting of systems, peripherals and networking equipment. In a statement issued to the press, Tech Pacific CEO, Shailendra Gupta said that the company was looking out for a strategic partner that could help its resellers and vendors expand their reach into new products, services and geographies. Most of the resellers that Express Computer spoke to felt that this move has been taken to strengthen Ingram's IT distribution arm in the Asia-Pacific region.

Fitting the pieces together

On the distribution front, Ingram had upped its portfolio by inducting BenQ into its computer component segment and added Acer and Xerox into its systems and peripherals group. Tech Pac brings clients such as Cisco and Samsung to the table and the combination and a geographical reach of the new entity would be the envy of any distributor.

A monopoly in the making?

While the industry is cautiously watching the acquisition process, there is a general feeling that it will result in killing competition, which is not a good sign. Says Dushyant Mehta of Mediaman Technologies, "This move will reduce competition."

Sandeep Parasrampuria of Best IT World India feels that the question of who retains management control comes to the fore. Looking at the near monopoly that would be created, market players are of the view that second level players should put together a front to compete. This is a view that Mehta vehemently echoes and which he reckons would moderate prices in the market.

venkatesh@expresscomputeronline.com