The marriage of Avnet, Inc. and Savoir Technology Group, Inc. forms one of the largest IBM midrange distributors in the world, but user feedback has been mixed about how IBM midrange and mainframe customers will fare.
The Phoenix-based Avnet announced it would acquire Savoir of Campbell, Calif., last March. The deal, finalized last week, is worth $140 million. Avnet is a major distributor of semiconductors, interconnect, passive and electromechanical components and computer products. Savoir is a distributor of IBM AS/400, RS/6000, S/390 and Netfinity servers.
While it's too early to speculate on how the merger will affect users, generally things that are good for the industry end up being good for users, said wholesale distributor analyst Clarke Walser, of Walser and Associates, Arlington Heights, Ill.,.
Walser said he thinks Avnet's acquisition of Savoir is a good fit. Avnet has successfully assimilated several other large acquisitions over the last few years and "there's no particular reason it will be different this time around."
Tom Ezell , a senior projects manager with Avery Dennison in California, has a slightly different take on the merger. While he is hopeful the consolidation will mean better service, he thinks the prices will get higher as the marketing channels narrow. Ezell, who specializes in AS/400s and RS/6000s, used to work for an IBM business partner that Savoir ultimately acquired.
Savoir's IBM distribution business will be merged into Avnet's Computer Marketing Group, but Savoir's storage and integration units be folded into Avnet's Applied Computing operating groups. Savoir's 600 North American employees will be absorbed by the two divisions.
Walser concedes the merger could ultimately affect prices as the number of competitors shrink. In fact, he sees IBM encouraging the consolidation of its distributors. Big Blue is ever demanding its suppliers offer more services which is hard for smaller distributors to provide, he said.
According to Walser, as consumers demand ever-increasing levels of service and lower prices, consolidation in the industry helps companies cut costs by taking advantage of the economies of scale. For example, generally sales staff isn't cut since selling computer systems requires "feet on the street," Walser said. However, one usually sees some cuts in clerical, accounting or legal positions.
Ezell also sees the distribution channels starting to shrink. "It's my impression, IBM has been pushing five or six main business partners and now wants to reduce that even further."