Will Distributors Feel The Heat From SolutionsEdge?

CDW is piloting the program with 10 to 15 solution providers, said Norm Lillis, CDW's vice president of sales, new markets and small business. While certainly a small number, that could still translate to millions of dollars per year in lost product revenue for distributors.

Distributors would not be entirely cut out of the process because CDW buys about half of its products from distributors. And the Vernon Hills, Ill.-based company expects that percentage to remain stable.

Also, it is a miniscule amount considering the combined revenue of the four distributors most likely impacted--Ingram Micro, Synnex, Tech Data and Bell Microproducts--is nearly $50 billion.

Kevin Murai, president of Ingram Micro, Santa Ana, Calif., believes solution providers will continue to use distribution because it enables them to maintain control of their accounts.

"Agency models hold tremendous potential for the channel but work best through distributors where there's no risk associated with losing client control or threat of taking the business direct," Murai said. "Today's solution providers are no longer product resellers. They are business advisers who make companies more successful, productive and efficient by using technology. That said, direct marketers can help fill a strictly product need. But when customers require a solution and need a partner with a serious understanding of their business needs, they'll continue to look to the solution providers."

Distributors could see gross margins impacted if the program became popular because CDW's volume allows it to buy products at a lower price from distributors than an SMB solution provider does.

But Ken Lamneck, president of the Americas at Tech Data, Clearwater, Fla., does not believe the program will generate enough business to worry distributors.

"As you may be aware, CDW has been doing something similar in the government market for years, but it has not had any significant effects on our business. Consequently, I don't foresee an evolution of this program as having much of an impact on Tech Data or the channel," Lamneck said. "CDW buys much of its product through distribution. The more business they can bring to the channel, the better for us all."

Synnex declined to comment on the program. Bell Microproducts executives could not be reached for comment.