A portion of IT channel trade takes place away from the official routes to market.
The basic premise of independent distribution is to offer resellers legitimate kit at a cheaper price by operating outside the vendor’s official channel but within the vendor’s trading region (in our case the European Economic Area (EEA))
A legal precedent was set on this front in 2012 when Oracle won a high-profile legal battle against Manchester grey market trader M-Tech over 64 Sun disk drives it had imported from the US and sold without the vendor’s consent.
DP Data Systems – a £50m-turnover firm just two years ago – ceased trading after HP filed a claim against the Manchester outfit last May for alleged trademark infringement.
Since the M-Tech ruling, numerous other firms, including KX Network Solutions, K2 IT and Gen-X IT have also been the subject of litigation from vendors, sometimes with terminal consequences for the companies involved.
The body count of Manchester based players continues to mount, with Gen-X, going out of business in January following legal action from Cisco for alleged trademark infringement.
However, high-profile entrepreneur Adrian Barnard who recently took over as CEO here at The Change Organisation, has a mandate to rid the sector of its negative connotations.
Speaking with CRN he said, “There are people who give all of us a bad name and one of my jobs is to talk about the reality of the industry and how independence has a leading role to play in supporting the channel. We are known by the vendors and we exist very successfully with the authorised channel prospering. We don’t threaten it, we don’t undermine it; we support the UK ICT resellers.”
Barnard said, “Although the independent sector is beneficial to the channel, it is unlikely to ever be publicly endorsed by vendors and distributors. They are, however, fully aware of the sector’s existence and will regularly turn to independent traders when they need to shift a large volume of stock quickly” he added.
Many firms on the receiving end of vendor litigation have labelled themselves as independent distributors but Barnard drew a distinction between these firms and the role The Change Organisation plays.
“I don’t see brokers, grey market, unauthorised at all in the same boat as an independent trader or distributor,” he said. “It’s an important distinction. Grey market traders are the kind of people who get fined, who get shut down, and are going into liquidation.”