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HP shocks channel with third distributor

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Hewlett-Packard SA has stunned its existing distribution channel with the appointment of Pinnacle Micro as its third distributor for its Personal Systems Group (PSG).

Pinnacle will also have access to HP's Imaging and Printing Group (IPG) products and Enterprise and Storage Solutions (ESS) products via existing distributors.
The appointment caught incumbent PSG distributors Tarsus and Axiz completely by surprise on Friday afternoon after one of their staff was allegedly approached by Pinnacle "to head up its HP PSG division". Confirmation of the deal apparently only happened after numerous phone calls to HP executives in Europe.
Speculation is rife that the Pinnacle appointment only came about to meet what are being termed as "unrealisitic targets" for the region. Both Tarsus and Axiz are believed to be holding about 10 weeks of HP stock and are what channel members refer to as "stuffed with stock".
Mark Perry, country manager for HP SA's Solution Partner Organisation (SPO), however, says that the appointment is strictly a business decision based on the strategy the company has for the region.
"We've been surveying the market for some time, we've looked at it, said: this is a different market, and approached it that way," Perry says. "There's not much of an overlap at all between Tarsus, Axiz and Pinnacle. It's a new area and a new market that we want to open up.
"We surveyed the landscape and this is what we have come up with," he says. "Our strategy here is that it is a totally new market. To simply appoint another distributor with the same client base as Tarsus and Axiz would be nonsensical – it would be silly.
"We've got growth objectives to meet and this is part of our strategy to do that," Perry says.
Pierre Spies, CEO of Tarsus, says he was caught by surprise with the announcement.
"I'm very surprised about the need for a third distributor [for PSG]," Spies says. "I think they are taking a very short-term view of the overall South African market conditions.
"I'm very disappointed and it came as a huge surprise," he says. "I think HP SA needs to realise that the IT market in SA is not Third World – it's First World – and that they shouldn't be chasing unrealistic targets. They say they want to capture 40% of the local market, but if you look at their market share in Europe it is only around 23%
"That is a more realistic target for this country," he says. "The SA market is only so big – and everyone plays in the same space."
Craig Brunsden, marketing director at Axiz, was also taken aback by Pinnacle's appointment.
"I've got to admit that we were taken a bit by surpirse, but as far as we're concerned, it's still a case of business as usual," he says.