CDW Acquires Micro Warehouse
CDW and Micro Warehouse have established similar business models. Each model focuses on offering similar name brand products to small - and medium-sized businesses in the commercial, educational, and governmental sectors. Yet despite the similarities in core competencies, CDW's acquisition of Micro Warehouse may open up a number of new opportunities for the firm.
(PRWEB) October 11, 2003
Natick, Massachusetts - On September 8, 2003, CDW Corporation announced the purchase of Connecticut-based Micro Warehouse.
Incorporated in 1984 in Vernon Hills, Illinois, CDW Corporation (Nasdaq: CDWC) is a leading catalog and Web-based distributor of hardware, software, and networking components for businesses, government agencies and educational institutions throughout the U. S.
Micro Warehouse, established in 1987, distributes approximately 30,000 computer products and services, including hardware, software, peripherals, and networking products, to commercial, education, government and consumer clients.
CDW's purchase of Micro Warehouse marks the company's first acquisition in its nineteen-year history. With minimal debt and $300 million in cash, CDW was poised in 2003 to make a deal.
The transaction includes:
A $22 million price tag;
The purchase of Micro Warehouse's U. S. and Canadian operations, including: 1. Regional customer databases;
2. Existing inventories valued at approximately $14 million;
3. Intellectual capital, including trademarks and copyrights;
4. Service contracts.
In a statement introducing terms of the deal John Edwardson, CDW's chairman and chief executive offier, said: "From the beginning we've set very clear acquisition criteria, which are: expand our customer base, extend our geographic reach, or enhance our product capabilities. With this investment, we have achieved all three objectives and delivered value to every CDW stakeholder group."
What benefits will this transaction bring to CDW's daily operations? What impact will this channel consolidation have on the industry as a whole?
Offerings
CDW : Hardware, software, networking products
Micro Warehouse: Personal computers, software, peripherals, networking products
Top brands
CDW: Cisco, Hewlett-Packard, IBM, Intel, Microsoft, Sony, Toshiba, etc.
Micro Warehouse: 3Com, Adobe, Apple, Cisco, Gateway, Hewlett-Packard, IBM, Intel, Microsoft, Sony, Toshiba, etc.
Professional services
CDW: Custom engineering, configuration development, installation, support/training
Micro Warehouse: Custom engineering, configuration development, installation, support/training
Core markets
CDW: Commercial, educational, and government clients
Micro Warehouse: Commercial, educational, government and consumer clients
Geographic regions
CDW: United States
Micro Warehouse: North America and Europe
CDW and Micro Warehouse have established similar business models. Each model focuses on offering similar name brand products to small - and medium-sized businesses in the commercial, educational, and governmental sectors. Yet despite the similarities in core competencies, CDW's acquisition of Micro Warehouse may open up a number of new opportunities for the firm. Below is a list of prospects for CDW.
Expand breadth of product offerings Micro Warehouse offers CDW an expanded lineup of consumer electronics, computer accessories and peripheral products aimed at consumer markets.
Exploit strong relationships with top tier suppliers Micro Warehouse distributes the largest selection of Apple Macintosh software and peripheral products in the U. S.
Increase CDW's client base Micro Warehouse focuses more heavily on consumer and education sectors. In fact, in his address announcing the agreement, Edwardson noted: "We believe that more than 75 percent of Micro Warehouse's corporate and public sector revenue is from customers who are new to CDW."
Expand CDW's geographic reach Micro Warehouse has a stronger presence within the eastern half of the U. S. and Canada.
Not only will this acquisition have a direct impact on the business of CDW, but it may also influence the distribution of computer accessories in a much larger context. Among the effects this purchase may have are:
Competitors of CDW may take a specialized or dedicated approach to the distribution of hardware, software and peripheral devices. Just as Micro Warehouse became the largest U. S. distributor of Apple Macintosh products, others may establish similar long-standing relationships with one or two top tier suppliers.
As distributors establish strong, dedicated relationships with top tier suppliers, distribution of smaller brand offerings may be squeezed out.
Consolidation in the channel may make it more difficult for new entrants to distribute competing hardware, software, and peripheral computer products.
Direct competitors of CDW may differentiate themselves by offering new or higher level professional services.
Venture Development Corporation (VDC) will further assess CDW's acquisition in its upcoming multi-client market research study analyzing the U. S. Aftermarket for Computer Accessories, Fifth Edition.
The research program will be packaged in two parts:
Electronic/Electrical Computer Accessories Non-Electronic Computer Accessories
This study will provide accurate, detailed assessments - including market estimates and forecasts - of the U. S. market for selected desktop and notebook computer accessories. The report will analyze and trend all factors affecting this market, identify near-term market opportunities, and investigate the competitive landscape.
To learn more about this study, please visit: http://www. vdc-corp. com/other/works/br03-27.html (http://www. vdc-corp. com/other/works/br03-27.html).
Venture Development Corporation, a technology market research and strategy firm, was founded in 1971 by graduates of Harvard Business School and MIT. Over the years, VDC has developed and fine-tuned a unique and highly successful methodology for forecasting and analyzing dynamic technology markets. The company has over 30 years of experience in providing market research, strategic analysis and consulting services to technology companies worldwide. The VDC mission is to provide our clients with strategic and tactical information that satisfies real needs and will provide lasting value, fostering client loyalty and respect.
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To view the entire press release including tables, go to:
Http://www. vdc-corp. com/other/press/03/pr03-67.html (http://www. vdc-corp. com/other/press/03/pr03-67.html)
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