IT distributors are reorienting their strategies

The disappointing economic results of most Greek information technology (IT) product distributors last year, including heavyweights Info-Quest and Altec, are not just related to the recession in the sector. Concentration trends are increasing in the European market, in a period when distributors are finding it difficult to maintain satisfactory profit margins. A cursory look at balance sheets shows that margins are below 5 percent. Companies are finding that after drives to capture market shares, the stress is now on services. International IT distributors, such as IBM and Cisco Systems, are revising their strategies and seeking to collaborate with distributors that can provide added value to products through services and integrated solutions. The repercussions of this strategy are not felt by the large distributors throughout Europe but by the smaller players, who are finding it difficult to invest in order to meet requirements for after-sale services. According to data from the research company IT Europa, the 1,500 biggest distributors of IT products in Europe reported revenues totaling nearly $88.5 billion in 2001, up 29.4 percent from 2000. By contrast, Greek distributors saw their results contract. Some of them, such as Altec, have already decided to limit their presence to wholesale trading and focus their interest on services and integrated solutions to boost profit margins. Despec Technology Holdings, which features in the list of the 20 largest European distributors after its acquisition of Holland’s VDDG, has decided to focus on the production of peripherals. IT Europa’s analysts believe that the winners will be among those prepared to face the fall in demand and those that will expand geographically to meet the requirements of information technology product manufacturers. Greek companies have tried to expand to neighboring countries in the past with little success. One such case was the Pouliades Group’s acquisition of Turkey’s Index Bilgisayar which dove into the thick of the country’s economic crisis. The previous standby arrangement, worth $250 million, was granted by the IMF to Yugoslavia in June last year, following the ouster of the country’s former autocratic leader, Slobodan Milosevic.

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