ChannelLife NZ - IDC: Integral, Axon to see "period of consolidation"

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IDC: Integral, Axon to see "period of consolidation"

Analyst expects to see consolidation as the firms integrate but it will compete with the major players as a result.

Yesterday Integral Technology Group announced it had acquired 100% of Axon Computer Systems. Jenna Woolley, IDC Analyst, believes that the merged entity will compete with the likes of Fujitsu and TelstraClear in terms of revenue and scale.

"Initially, staff numbers will be approaching 400, however this is expected to reduce dramatically as part of the integration," she said. “IDC expects that the integration will prove somewhat of a challenge for Integral; in part because of the greater scale of Axon, and in part because of the cultural differences between the two companies.”

IDC expects to see a period of consolidation from Integral and Axon over the next few months as it embarks on the integration and consolidates its position in the market.

Woolley continued, “The greatest impact will be in the tier 2 space, where smaller tier 2 providers will have the opportunity to capitalise on the integration and consolidation period, and a potentially re-focused Integral/Axon. For larger tier 2 players, there will be increased competition as Integral/Axon begins to leverage its newfound scale."

She expects that Integral, Axon will attempt to compete head on with the large tier 2 and small tier 1 players, and address the enterprise segment of the market.

“From a market perspective, IDC believes that the merger, and the change in market dynamics that it represents will see far more opportunities than threats appear from the state of flux. Other players in the market stand poised to benefit from customer attrition during and following the integration process, as well as from staff attrition as headcount is reduced in the new entity. The greatest threat facing the market is what IDC anticipates as a fiercely competitive push for new customers as Integral/Axon competes on price to maintain and grow its customer base,” she concluded.

Axon CEO Scott Green told The Channel yesterday that the deal will deliver a lot of end value to customers.

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