Citrix took the unusual step this week of canning 3 of their 4 distributors in the US. Only Ingram Micro remain and they will now be processing Citrix orders from all of the 1,900 partners in the States. Apparently 75-80% of the Citrix business in America goes through the channel and the US does (I think) around half of the total number for Citrix globally. Now I only got a C in GCSE maths but, by my reckoning, that equates to around about half a billion dollars going through one single distributor!
I can't for the life of me fathom out why Citrix would want to do this. For two main reasons.
Firstly, there are, oddly enough, one or two resellers around who don't actually want to be forced to buy from just one distributor. Credit is always an issue for the smaller resellers and, even for the bigger organisations for whom credit is not a hurdle, resellers want to know they are getting a good deal. Monopolies are never good for customers and if Ingrams can pretty much charge whatever they want, resellers may lose confidence very quickly. It also allows for unfair sales situations where, for example, the disti can supply a favoured partner with lower pricing than another, and neither does it allow a reseller to price-check an item. (Note: I am writing very much on behalf of the resellers - as a disti myself, the latter situation has led to as much pain as it has joy over the years!)
The second reason is VMWare. A battle royal has long since commenced, both in the server virtualisation arena as well as the desktop. The last thing Citrix need to do at this stage is jeopardise this by losing resellers, regardless of how few that may turn out to be. If a reseller doesn't like Citrix's decision but has already invested in this area of technology, which product do you think are they now going to push?
Wake up Citrix - you are now in a C.O.M.P.E.T.I.T.I.V.E. market, your own monopoly days are long gone!
Having said all that, Ingram Micro must be chuckling all the way to the bank about now. At a (probably rather conservative) average of 5% profit for the disti, they would have pocketed approximately $25 million on last year's figures. Twenty. Five. Million. Dollars. Margin. On one (quite small) vendor.
I am assured it won't happen in this country. I have a really good relationship with the guys over at Ingram who were taken on last year to push sales of Access Essentials (we don't sell it so there is no overlap with what Ingram do), but I may well now be extra, extra nice to them just in case it does!
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