Synnex: We're Shocked By Loss of IBM

The co-CEO of Synnex said he was shocked by IBM's decision to deauthorize the Fremont, Calif.-based distributor from selling System x products as of Jan. 19, 2009.

Kevin Murai said IBM executives told him that IBM needed to regain share and relevance in the market, but they were otherwise scant on details on why they chose Synnex instead of Arrow Electronics, Avnet, Ingram Micro or Tech Data.

"Basically, IBM said there's a letter coming to you but we want you to know you're no longer authorized to sell x Series," Murai said.

Murai asked a few questions and told IBM that he didn't see the benefit to the vendor in deauthorizing its top System x distributor, a supplier that was also growing share. But, Murai said, IBM was firm in its decision.

"They really didn't have a lot of answers. What they said was they are losing share in the market, losing relevance in the channel, and as a result, they felt a need to take capacity out of the channel," Murai said. Calls to IBM on Friday and Monday seeking comment were not returned.

On Friday, both IBM and Synnex sent separate e-mails to customers informing them of IBM's decision. Synnnex received many calls from unhappy solution providers last Friday, Murai said.

"[IBM] didn't share a whole lot more than that. I also told [IBM] that this would have a negative impact on their customers and their customers' business. They understood, but they were firm in their decision," Murai said.

Meanwhile, Synnex starts the transition of helping its System x solution providers migrate to another distributor -- or to another platform. Murai said Synnex hopes to convince its solution providers to sell Hewlett-Packard servers instead of IBM.

"We have a strong relationship with HP. We have a good assortment to take back to customers and we're always looking to enhance the line card," Murai said. "Really, what we will focus on is our big advantage. The reason we were gaining share is because of the way we go to market with our dedicated technical sales organization. Our technical sales handles most technical questions in one call, rather than move them to tech support. We will continue to leverage that organization and introduce those customers to other line cards."

HP accounts for about one-third of Synnex's revenue, but Murai isn't concerned about putting too many eggs in one vendor's basket. "Not at all. Not given that it's HP," Murai said. "Our relationship with them is very strong, very strategic. I have no issues [taking on a higher percentage of sales with HP]."

Synnex continues to have a relationship, and a strong one at that, with IBM's Software group, Murai said. "It's business as usual there," he said.

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