With IBM UK Ltd taking away its RS/6000s and PS/2s and Digital Equipment UK Ltd ready to end its agreement with ICL Plc’s Technology Plc personal computer and workstation distribution acquisition, there has been much frenzied speculation that Sun Microsystems Inc and Compaq Computer Corp are ready to withdraw their products too, and that ICL has dropped a very big brick on its foot in buying the company. Getting ICL to comment on or explain anything much is a fruitless task, but counter-arguments are easily marshalled to the chorus of derision that has greeted the aftermath of the acquisition. The first is that ICL paid only UKP30m upfront for a business that carried a buyout tag of UKP29m three years ago, and had substantially increased volume in the interim. The other UKP10m in the price depends on performance, and if that is rotten, ICL will need to pay no more. That UKP30m bought some UKP130m of distribution business, and knocking that amount out of the UK market would leave a big hole if all the third party suppliers do take their toys away. But all that business is not simply going to vanish: ICL will be refilling the channels with its own personal computers and DRS 6000 and DSR 3000 Unix machines before they even empty of third party machines – and by using a captive distribution network, ICL should be able to improve overall profitability. There may be a significant fall in volume in the first year or so, but while the third party suppliers to Technology may feel that they have no alternative but to withdraw their products, they look like being the net losers as a result, while ICL sheds crocodile tears all the way to the bank.
