Meeting the basic needs of networking vendors will be a relatively straightforward extension of Avnet s business. Earning their trust might be more difficult, given the economic conditions that come with this scenario. These are interesting times for distributors in general. Tight margins suggest that the ultimate winners will be the players that can best leverage economies of scale - in which case get ready for consolidation. But recent conditions on Wall Street are likely to cause potential mates to tread more carefully than they might have done at this time last year.
Consolidation is tough enough in a bull market.
It's a much more difficult situation when investors are clinging to their life preservers, hoping to reach solid ground. For vendors, the prospect of distributors consolidating raises uncertainty. Major channel transitions can be highly disruptive. Vendors don t want to make them frequently, and if the distributors are poised to consolidate, vendors might end up with a lot more than they bargained for. On the other hand, there is the potential for vendors to use that uncertainty as a way to extract more preferential terms than they otherwise would have gotten.