Digiland Australia has offloaded its branded vendor distribution contracts to eXeed in return for a major share in the Melbourne-based distributor.
In a deal announced Monday, Digiland has effectively exited the branded distribution game in order to focus on more profitable OEM products --such as CPUs, motherboards, hard disks, monitors and bare bones PCs -- targeted at system builders.
In addition, Paul Kruss, managing director at Digiland Australia and New Zealand, left the company on Friday after less than four months in the job.
Digiland will form a new 'Whitebox' business unit which is not included in the eXeed deal, the company said.
Michael Bosnar, managing director at eXeed, said Digiland has provided the distributor will the equity and funds to grow his business. 'eXeed and Digiland's branded products business will merge under the control of eXeed's name and management team. We are hiring people to ramp up the new entity,' Bosnar said.
He said that eXeed would take up to 12 Digiland staff in Sydney, Melbourne and Brisbane. There would, however, be some redundancies at Digiland, he said.
With these new vendors on board, eXeed's sales revenue could catapult to around $50 million this financial year -- up from $20 million last year -- Bosnar said. eXeed would also pick up an additional 2,000 former Digiland resellers, of which around 65 percent are currently active, he said. Previously, eXeed had 400 resellers on its books.
Bosnar claimed that if eXeed can prove this arrangement works in Australia, there is the potential to 'do the same thing [with Digiland] in Asia'.
He claimed that the branded vendor contracts 'didn't give them [Digiland] the return they were looking for' and by offloading vendor partnerships and taking a stake in eXeed, the company would get a better return for a fraction of the investment.
James MacBeth, marketing manager at Digiland, claimed Digiland had taken a stake of 'more than 50 percent' in eXeed as a result of the new arrangement. 'The branded vendor side of the business hasn't been profitable,' he said.
eXeed recently has jumped head first into the converging telecommunications and IT markets, signing new agencies with Hutchison Telecoms. It currently sells built-to-order HP servers and would be complementing these products with other server, mobile products, mobile handsets and accessory brands.
The company said it is in consultation with additional server, notebook, Web appliance and printer vendors to boost its 'mobility range'.