New And Improved Toshiba: Higher Margins, Rebates

Toshiba is increasing profit margins for solution providers that buy its notebooks from distributors in a move the company claims will level the playing field against direct marketers such as CDW and Insight.

InformationWeek Staff, Contributor

March 3, 2006

2 Min Read

Toshiba is increasing profit margins for solution providers that buy its notebooks from distributors in a move the company claims will level the playing field against direct marketers such as CDW and Insight.

The higher margins are part of an aggressive revamp of the Toshiba Preferred Partner Program, which is expected to go into effect April 1. The new program also includes a dramatic increase in back-end rebates for partners of all sizes.

“We are revamping the program virtually top to bottom,” said Jerry Lumpkin, vice president of Toshiba’s Business Channel Sales. “This is a new Toshiba.”

Lumpkin said the higher margins create “absolute parity” with direct market resellers for independent Toshiba partners buying from distribution. “Resellers will now be able to compete with mail order,” he said.

Toshiba is also ratcheting up rebates: Entry-level Silver partners will get rebates of 1 percent, vs. zero previously; for Gold partners, rebates will rise to 2 percent, from 1.5 percent; and for Platinum partners, rebates will increase to 3 percent, vs. 1.5 percent. Toshiba is also throwing in a new customer rebate of 3 percent on the back end for any customer brought on board by a VAR that has purchased less than $25,000 of Toshiba products in the past six months.

Bob O’Malley, senior vice president of marketing at distributor Tech Data, Clearwater, Fla., applauded Toshiba’s new pricing model and its push to re-engage with the channel. “They are looking to get away from the special bid, ship and debit model that adds administrative costs for programs intended to harvest as much price as possible but also offer discounts when the need exists,” he said. “Most manufacturers have some approach to simplify pricing. Toshiba is attempting to be the best of those programs.”

“Anything Toshiba does to bring back programs of the past that at one time made them a great partner is welcome,” said John Marks, CEO of JDM Infrastructure, a Rosemont, Ill., solution provider. “We all moved a lot of Toshiba product years ago, and their new programs look great. But they need to end the channel conflict.”

Kevin Murai, president of distributor Ingram Micro, Santa Ana, Calif., said the price parity changes are important but don’t always equate to brand preference. “To gain momentum quickly, Toshiba is working with us to develop and execute on an effective partner program that offers VARs the support and resources they need to move the needle and drive sales,” he said.

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