The local arm of AMD has revealed it is not only cutting distributor Rectron from its channel, but rather "a few" of its distributors.
However, at least two of its current master distributors claim to know nothing of this.
According to AMD country manager Imi Mosaheb, "we have spoken to all of our distributors and shared what we want in terms of goals and targets, and the feedback from a lot of resellers is that we have to let go of a few".
Last week, Rectron group operations director Dean Prinsloo revealed the company will no longer distribute AMD products. According to Prinsloo, the company had increased its Intel-AMD mix from 95%-5% to 90%-10%, but this was "still not enough" for AMD.
Mosaheb was surprised at the fact that Prinsloo revealed Rectron is leaving the AMD channel. "I was a bit taken aback as it was a mutual decision and the discussions were confidential," says Mosaheb. He declined to provide the names of other partners who are also set to leave the channel.
"Notice has been served on a number of partners and the legal process of severing contracts takes about 30 days to complete, so by the end of the month or the beginning of next month [September] this should be finished."
AMD's international Web page still lists Annex, Legend, ISA (also known as Asbis), Legend Tech, and Rectron as its master distributors in SA. Wavestone, Arrow Altech and EBV are listed as channel providers and industrial franchises.
Annex assistant GM Ravi Perumal yesterday said the company was "still" a distributor for AMD. He did not, however, want to comment on whether any discussions were taking place around changing the company's status.
Legend and Legend Tech SA MD Rob Carlton said he had not heard of AMD looking to reduce distributors and the company's status as a master distributor was still the same.
Wayde Colenborne, CEO of ISA Hardware, also said the first he heard of changes in the AMD channel was in the media, and the company is still a master distributor for AMD. He noted though that ISA distributes to pan-European countries and was, therefore, "not as affected" by changes in the South African channel as companies like Rectron.
Changing targets
Rectron's Prinsloo said yesterday "regardless" of whether the move to separate from AMD was a mutual decision, "it is in the best interest of Rectron to focus on the biggest part of its business, which is Intel".
Even though Rectron was growing its AMD market segment "quarter-on-quarter", the AMD targets were higher than those it had been achieving thus far, he noted.
Mosaheb confirms AMD wants its distributors to be at a bare minimum, and reflect AMD's international market share which is currently at 28% to 29%.
AMD, however, also expects its local distribution partners to reflect trends seen in other "growth countries" such as Brazil and Malaysia.
"In Brazil, for a long time, we had more than 50% of the market share. In the US we've had more than 60% of retail for more than two years already," says Mosaheb. "So the first level of the target is worldwide and it is very do-able in terms of the platforms available. The second level is much more than in the past."
AMD believes these targets are realistic. "We have been showing them [distributors] growth that is faster than the market," says Mosaheb. "We [AMD] saw 61.3% sales growth year-on-year" and the company is now looking to expand the sub-Saharan African region to include the Indian Ocean as well.
Channel changes
Mosaheb says AMD is restructuring its channel to be less "top heavy".
He points out that this means that although the current pool of AMD distributors will be trimmed, the total number of "solutions providers" will grow. According to Mosaheb, the master distributors will still be South African companies, but the solutions providers "may be" regional.
He says: "The market [in SA] is not big enough to have a lot of mass distributors, so we are creating a tiered system."
Distributors and partners will have to carry a wider range of AMD products in future. "Unlike Intel, we don't only sell processors, but also graphics, so the distributors need to provide all our products. We want to sell solutions, not just hard drive components," he concludes.
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