ASCII, Ingram End Deal

But many ASCII solution providers did not sign up by Ingram Micro's December deadline. These solutions providers were waiting for a renewal of the special ASCII arrangement, which had been in place for several years. They were placed, by default, into the Professional Choice category, which offers the most services but also the highest product prices. As a result, dozens of ASCII members have pledged to reduce or eliminate their purchases through Ingram Micro.

"My concern is not the product discount, but the way the negotiations have gone. I know the margins aren't there anymore to do [pricing discounts]," said Jay Tipton, owner of Technology Specialists, Fort Wayne, Ind.

"These things should been resolved way in advance of forcing people to make a decision," said Chris Scotti, president of AgniTek, College Station, Texas.

Ingram Micro told ASCII as early as September that it did not plan to offer a product pricing discount and reiterated its position in October and December, said Bob Stegner, vice president of market development worldwide at Ingram Micro, Santa Ana, Calif.

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Alan Weinberger, chairman and CEO of ASCII, said a product pricing agreement is unlikely, but a relationship with Ingram Micro focusing on a value-added program is close to being finalized. "We are going to have a very substantial, tangible program that will be very satisfactory to our community," he said.

ASCII members bought about $850 million in products from distributors in 2004, including about $300 million from Ingram Micro, Weinberger said. Several solution providers said their business will transfer to Synnex, which has a deal with ASCII, and to Tech Data, which ended its pricing agreement with ASCII in 2002.

Several ASCII members including M.J. Shoer, president and virtual CTO of Jenaly Technology Group, Portsmouth, N.H., likened the situation to Ingram Micro's decision two years ago to revoke the credit lines of many smaller solution providers. Shoer only recently renewed his own credit line with Ingram Micro with ASCII's help.