Monday, May 7, 2012

A Few Thoughts on the Purchase of GTSI

GTSI, the grand-daddy of government resellers, today was purchased by Unicom Systems of Los Angeles. Initial news is sketchy, as Unicom is not a publicly traded company, but here are a couple thoughts.

This is big news for the government reseller community for many reasons, not the least of which is that GTSI is among the oldest (if not the oldest) of the IT resellers targeting the feds. For many manufacturers in the 1980s and early 1990s, it was the first and often the only stop for market entry.

As most know, GTSI has had some problems over the past few years: lower sales, sagging stock price, problems with the SBA over ANC relationships, and more. I have no interest in rehashing these.

So here are a few thoughts regarding Unicom's opportunity.

First, market entry can be accomplished organically or by purchasing an established company, and there are thousands examples of each. For Unicom, this could be a great market entry strategy. This moves them from obscure to very much on the radar.

Second, when companies with a long tradition get purchased it is usually not a good idea to change the name, as the brand equity usually means a lot to the market. In this instance, there is so much baggage with the GTSI name that it is probably better to apply the Unicom name. For many people and for a variety of reasons, GTSI was the company they love to hate.

Third, Unicom is in LA and GTSI is in Northern Virginia/DC.  Who is going to drive the Federal bus? Unicom has a GSA Schedule, but it does not seem to be very active. Now they have a TON of contracts, so they need someone who can manage these who has demonstrated success to maximize the value of each these vehicles.

Fourth, GTSI is a reseller, regardless of what the press releases say. That means they need great manufacturer relationships. They also need to make a huge decision on whether or not to continue representing hundreds of companies or to narrow the focus to maybe 25-50 companies.

Fifth, if they are going to revitalize this company, regardless of the name, they need a great spokesperson. When CDWG made the successful run toward the top of the VAR category in the mid 2000s, Max Peterson was the "face" of the company. he was a capable, credible and available spokesperson. In my opinion, this was one of several critical factors in the CDWG growth curve.

This is a huge opportunity for Unicom Systems. Purchasing a company with a wide array of contractual vehicles, a solid installed customer base and a recognized brand name is always a plus. But in this market we have seen this before, and it is never a given that success will occur.

The unasked question is will this significantly impact the government VAR landscape?  That remains to be seen.

Stay tuned..............

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