The IT Threat
Traditional PC retailers, like CompUSA, know all about the importance of PC and CE diversification. Their stores are stocked with household names that have been around for years. Blurring the line between high-end equipment, entertainment systems, and personal computers is a constant reality for CompUSA. And since the retailer acquired Good Guys, diversification is even more important to their business. A consumer can get a PC and can also get the latest and greatest home entertainment center.
"The CE manufacturers need access to this new, computer-based reseller who is selling convergence more and more." says Davis. "The manufacturer can only get to that reseller through a diversified, multi-channel distributor. The only challenge initially was awareness of this type of reseller on the part of the CE manufacturers. I think in many ways they [CE manufacturers] were about protecting their typical CE reseller, and concerned about the differences of the computer resellers' business model."
As far as differentiation, Davis says that his own experiences in distribution are comparable: "In the computer distribution business, we had to focus not only on a great sales and service model, but also making sure our logistics and IT structure stayed ahead of the industry. The CE distributors, most of them being regional and confined to a small territory, have not had that kind of pressure, so in many ways, they have not kept up. The differences will really start to show as the two industries start to cross over more and more."