Pricing Forecast: CDW Tactics to Continue

Analysts say CDW's aggressive pricing won't change as a result of its acquisition by a private equity firm.

The chatter has been rampant: Will CDWs pending acquisition by a private equity firm put an end to the companys recent very aggressive pricing?

Analysts have answered with a resounding no.

"Some VARs have been speculating that this could take the price pressure off," said Christina Richmond, research manager for hardware channels and alliances at IDC. "But its not necessarily true that they will not be as cost competitive. If anything they will have more flexibility there because they wont be under scrutiny by Wall Street."

Forrester Research analyst Michael Speyer agreed with that assessment.

"I dont believe CDW will start raising prices," he said. "The price competition in the channel will still be very intense."

But Speyer and others agree that CDW will begin to put an even greater push behind its services business.

"The channel will start to feel more heat going forward in terms of competition on services," he said. "You will start seeing this 12 to 24 months out."

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Pricing will be one component of that increased competition in services, Speyer said.

"The more interesting issue is how will this affect what the channel will look like 12 to 24 months out," he said. Speyer believes that this CDW deal may be the precursor to a number of companies setting out to create "Super VARs," or VARs with a national footprint and very strong product and services businesses.

Such Super VARs may be assembled by private equity firms that buy several VARs and combine them. Or they may self-assemble as VARs merge with each other in order to better compete, he said.