Thirty years of doing deals with Dicker Data and HP/HPE

In 1993, a suited-up Fiona Brown was holding onto her Toshiba laptop, contemplating whether she should have bought a Compaq one for the boardroom meeting she was about to enter into with a few of the vendor's key executives. Perhaps later, just in case they don’t get the deal. 

“They rang the next day and said they were giving us the distribution deal for New South Wales and Victoria,” Brown recalled. 

“It was a game changer! It was the biggest event in our early history. 

At the time, Dicker Data had a few big names in its portfolio such as Toshiba, Epson, NEC and Canon and had been in the distribution game since 1978, building the largest SMB reseller network in the country. 

“Compaq was a major brand in the PC market with both desktops and laptops and later networking products. A complete solutions provider, filling a significant gap in our product range,” she said. “We had over 3,000 resellers, some that we've dealt with for 15 years. So, we had all these little tentacles out into the marketplace that could get the reach that Compaq was looking for.”

The Compaq deal gave Dicker Data an increased product range to grow the business and its customer base, marking it as one of its largest vendor partners in its portfolio still to this day. The number of small- to medium-sized business (SMB) resellers has also spread from 3,000 to more than 10,000 across Australia and New Zealand.

“Compaq was incredibly supportive and provided the necessary sales and marketing tools to compete in the channel. Compaq only sold through resellers,” Brown said. 

Throughout the years, the market shifted with Compaq buying Digital Equipment Corporation in what was described as a mega deal in 1998 for US$9.6 billion. Three years later in 2001, HP made the move to purchase Compaq for US$25 billion, changing the competitive PC landscape ever since.

Many sleepless nights were had as it was determined who would survive the distribution rationalisation that transpired as a result of each acquisition. 

When Compaq bought Digital, there were 16 distributors at that time and that was brought down to three or four, which Brown described as “really harrowing.”

“For the people who didn't make it through, that was the end of their businesses,” Brown said. “So I wore my lucky suit on that occasion for the HP rationalisation when they bought Compaq. That was rationalised from six down to two or three. We were just so fortunate that we were selected to go through but I think it was the fact that we specialised in that SMB space, that's what got us through and is still our strength today. 

“I'm very fond of all the regional and smaller resellers. We never treated them any differently and they got the same pricing and same setup.”

CEO David Dicker added with HP buying Compaq, this paved the way for the distributor to access HP’s printer segment, a slice of the portfolio it had been vying to access for years. 

“Coming through the Digital/HP distributor cull was probably our biggest achievement after initially gaining access,” Dicker said. “We got through that despite betting we would not make it, which was very satisfying.” 

Dicker Data was in a unique position, owning its facility with no debt and a very lean operation, which allowed it to compete through the price wars of the 90s.

“Looking back, we were entrenched with our channel partners, some for 15 years plus and those relationships supported us and stayed loyal throughout the rationalisation of the channel,” Brown said. “We kept doing what we had always done and remained flexible, with our sole purpose to provide the best service and support in the industry.

“Other disties couldn’t compete on 2 per cent gross margins and didn’t make it through the rationalisation that took place, especially with the Digital acquisition and then the Compaq acquisition. 

“It was very stressful knowing with each acquisition that distributors would be terminated through a presentation and elimination process. There were many sleepless nights worrying if we would make the cut.”

Dicker added it has always managed to meet and beat its competition, relying on its performance metrics.

This article has been reposted from ARN