Irish distribution business grows in 2004

Trade

The IT distribution business in Ireland continued to prosper in 2004 demonstrating strong volume growth and a reasonable value growth of about nine per cent

As in previous years price erosion continued unabated with various vendors reporting a wide range of figures from as low as 15 to as high as 25 per cent. Price erosion was much more pronounced in the hardware area and played a much smaller part in the software area with companies like Microsoft managing to hold prices reasonable stable.

In terms of the top ten chart the sequence in the top half of the table changed very little from the previous year with Midia being reintroduced in the listings.

The behemoths of the industry Sharptext and Clarity continue to be out ahead of the rest accounting for well over half the revenues for the top twelve distributors. Interestingly the proportion held by these two companies appears to be slipping.

There was more jockeying around in the second half of the table. Asbis moved up, Data Solutions and Osmosis fell and Noxs dropped out of the top ten distributor list.

In terms of percentage growth in turnover Asbis performed the best coming in with nearly 32 per cent growth against the total of the top twelve with nine per cent growth.

A unique feature in this year’s table is the inclusion of projected figures for 2005. Most companies, apart from the publicly owned, supplied projected figures and the outlook for 2005 suggested that the growth pattern will remain unaltered for 2005.

Most of the industry leaders interviewed were quite buoyant about the prospects in the current year. Some of the companies, notably Midia, Osmosis and Data Solutions that were in “consolidation mode” last year are quite optimistic about growth prospects for 2005.

Apart from the distributors competing among themselves they also have to compete with the some of the UK distributors.

Generally, Irish distributors felt that competition from this quarter was not very strong and tended to be based on lower prices and with little after sales follow up.

As some of the players continue to be quite small it is reasonable to suggest that there will be further mergers or takeovers especially as some of the distributors just play in very specialist areas such as security or networking.

In the last two years there have been at least two consolidations Emcee and Midia and the acquisition of Sentryst by Commtech.

Apart from the air of optimism expressed by the distributors most of the companies appear to have got their houses in order and their cost base under control.

While most of the Irish distributors (apart from the top two) cannot command the same buying power as their English counterparts their strong presence on the ground combined with local contacts helps to ensure that they can compete effectively. There is also an increased emphasis among distributors to adopt and exploit the benefits that e-commerce can bring.

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