Globalization, I believe, has become increasingly important to a distributor's survival, particularly those that can't rely on specialization or niches. I don't think the Pioneer move came as a huge surprise to many, because many large OEMs and EMS companies are shifting manufacturing to low-cost Asian regions, particularly China, and Pioneer just didn't have the muscle to support those customers.

Most of Pioneer-Standard's industrial-electronic components business focus over the past few years has been heavily geared toward creating Web-based component selection and research databases as well as engineering and e-business tools. While rivals Arrow and Avnet were doing the same, they were also focused on expanding their global presence via acquisition while integrating worldwide operations at the IT-system level. That made all the difference.

Matt Sheerin, senior analyst for Thomas Weisel Partners LLC (New York), recently summed up Pioneer's dilemma. "It has become pretty clear that if you're a semiconductor distributor and you don't have a global footprint, then you will either lose suppliers or customers because of a migration of manufacturing from North America to Asia, which is likely to increase."

And yes, I realize that Pioneer has small equity investments in overseas distributors, which was a key part of its global expansion plan. But they didn't bring much to the table. A good case in point, Sheerin notes, is Analog Devices Inc., a major line for Pioneer-Standard until being dropped recently from its distribution roster. Analog Devices recently added Arrow Electronics, giving ADI three global distributors, Sheerin said. "I think this was sending a strong message that they need distributors that have a presence in North America and that are global," he said.

That doesn't mean that midtier distributors can't succeed in extending their global reach. If some midtier distributors, which focus on demand creation and engineering support, continue to cast themselves as niche players with technical support in other regions, they will do well, Sheerin told me.