Time rescues Tiny
Customers fine, creditors not so fine
Wait long enough and it shall be yours: Time Computer has bought the business and certain assets of Tiny Computer, the UK's biggest PC maker, which went into receivership yesterday. The price was not disclosed.
Time, the UK's second biggest system builder, is assuming all Tiny's UK customer warranties (hurrah), but trade creditors will have to rely for Grant Thornton, Tiny's administrators, for any payout.
Tiny's former customers in the US - the company closed down there in August - will be less fortunate than their British counterparts. In the light of Tiny's collapse in the UK, it will be difficult to see how their warranties will be honoured (See this story about US Tiny customers from the Seattle Post-Intelligencer ).
So why did Tiny collapse? Let's turn to administrator Andrew Hosking of grant Thornton for the answer: "Competition in the sector has been savage and consolidation inevitable, : he says. "Tiny did not adjust its overhead base in response to sales which were down some 40 per cent. In consequence substantial losses were incurred."
He's delighted that Tiny is being sold as a going concern, protecting customers, and ensuring that creditors get some of their money back.
So how come Time, Tiny's biggest rival, was able to move so quickly? Simple: the two companies have been in talks about Time buying Tiny for more than six months. Occasionally rumours spilled over into the industry - earlier this month, for example an Intel staffer was spotted at BETT, a UK educational IT show, asking people what they had heard about a Tiny/Time merger. But certainly as of last week, no deal had been signed - as no agreement over price had been reached. Now Time has got Tiny - we assume - on the cheap.
The Tiny/Time combo will become the UK's second biggest PC retailer, giving Dixons Stores Group a proper run for its money for the first time. The retail outlets of both companies are to be renamed The ComputerWorld, emphasising a life beyond making and retailing PCs. Also this delivers some distance with the Time and Tiny brands, which have received less than adulatory press coverage for post-sales support.
The Time takeover comes as a big boost for AMD - Tiny is an Intel-only shop, while Time is an AMD-mostly system builder (it's AMD's biggest UK customer). According to industry speculation, AMD was prepared to provide some soft financing to make a deal happen.
Time confirms that AMD will return to the Tiny line-up, which it is keeping as a separate brand. If Time is sensible it will beef up its relationship with Intel. That way it will be able to extract maximum co-op marketing kickbacks, and best pricing.
Last year was a torrid time for PC retailing in the UK, and a combination of the two companies makes sense for cutting costs, and better use of marketing money. There will be less need to advertise against each other - bad for newspapers - or to have two brands for the education market; expect also fewer retail outlets - there will be little need for 300+shops, and Time already is talking of only 150 The Computerworld outlets; the deal also delivers manufacturing economies of scale. ®