The response from resellers and vendors to the combining the VARVision and System Builder Summit event was overwhelmingly positive. A lot of that had to do with the great weather in San Francisco, the positive attitude of the reseller and system builder community about their business outlook and a lot of the positivism was based on some exciting new products, programs and services being rolled out by the companies in attendance. Here's a quick recap of some of those programs.

WaCA - the leading Atlanta-based services and warranty provider with more than $100M in annual sales has started expanding its services offering and is moving deeper into OEM area - specifically working with "white box" makers. The latest service is Digital LifeLine, a customer services application that sits on customer machines. "System builders love the added value we provide their customers, it also helps them figure out where the bad parts are, a WaCA executive said…(get name)

Michael Zak, VP of Sales and Marketing at ARM Computer, is buoyed by the recent success of notebook computers in the system builder market. He noted that 41% of the US market for PC's in "white box" systems and he believes notebooks are headed to the same type of success. "Today, the notebook category is growing faster than desktops. We are a if you want to go beyond "name brand systems" good place to start, Zak said. We can ship on demand and don't need huge volume commitments."

One of the more interesting "new" companies we can across was iParkSV (Silicon Valley). CEO Jeffrey Morrison and Business Development Director Matt have launched channel marketing program on behalf of 2500 Korean Companies who are looking to expand their presence in the US. Korea has become the center of innovation and development in all areas of PC, IT and Telecommunications but there was a hurdle in terms of getting products to market because many of the smaller companies were under the radar of US Channels of Distribution. Armed with a significant investment from Korea's Ministry of Information and Communication, iPark is helping bring new technology to the reseller/system builder channel. Morrison was promoting security software, entertainment products, networking technology and much more at the show but he also promoted the improved margin structure that a lot of the products offer.

SED is a distributor on a roll. Despite the competitive nature of the reseller and system builder market, the company is growth its market share because its niche is "relationships and meeting customer needs," said Jonathan Elster, Vice President of Sales. "We're not sitting by the phone waiting for orders, 85% of our sales are outbound sales calls, he added. The Company is looking to grow its account base over the next and is adding systems and personnel to support its continued growth.

Acer America was showing (not quite yet shipping) its XP tablet - one of the more innovative hardware products that we've seen in a while. Expect hot demand once this category starts shipping and we expect Acer to lead the way in the reseller and system builder space.

ACCPAC's Nancy Allan, was offering a sweet suite of of office products targeted at the SMB market designed for System Builders who can build software into their product offering to increase revenue and profits. The Suite includes: Accounting, Messaging, fax, Internet Tools and Security. "It's the next suite after Microsoft Office," Allan explained. It's all high quality and easy-to-use software, she added. (We never would doubt you Nancy).

Benq, formerly Acer Communications, were out in the San Francisco event to "bring enjoyment and quality" to the technology marketplace. Benq is a large OEM player in Taiwan and creating some very exciting products in the display, storage and multimedia category. If you are not currently doing business with this company its probably because you haven't met with them. They have great products, programs and personnel.

Digital Persona's George Myers said his company is gaining traction in several key markets including financial, healthcare, and government. "Security policies are impacting business standards" said Myers, who is clearly building a solution to facilitate workflow but maintain high degree of security around companies data. DP was out at the show aggressively recruiting channel partners in the security space.

Oculan’s Darrek Porter is still trying to save the reseller channel. Well, sort of. Oculan has a great technology offering in the area of network and systems management but realized that what would differentiate their solution from others would be to sell it as a subscription service rather than a product. He and his Oculan colleagues further realized that resellers were all saying they want to increase services as a part of their business but services offerings were slow in development with a lot of resellers. “It’s hard to go from selling hardware and software to monthly subscriptions,” Porter said. So Oculan has been hard at work at figuring out how to promote the shift and help resellers get to where they want to go. To that end, Oculan has partnered with the Outsourcing Institute to create a system for developing a services program, including things like “how to quote a price for seat management, handle other RFP’s, etc. The templates will be “Oculan-ized.” We are really focusing on our customer’s customer and helping our partners learn learn how to sell "services" to truly demonstrate a compelling value proposition, said Porter. He added that their approach, and programs, are gaining momentum. (And their Conehead presentation at the show wasn’t bad either.)

Like the sun and moon, there is Intel with lots of exciting enhancements to its line of products for the desktop, notebook, server and wireless markets. "We continue to bring out channel focused products - high volume, great prices and programs," said Wilton Agatstein, General Manager at Intel. He added that Intel has an Advanced Warrantly Replacement program and hands-on training program that is gaining a lot of favor with resellers and white box builders. The Company is in the middle of a revision and series of technology announcements so, as always, stay tuned to Intel for exciting technology developments.

Dan from Logitech provided some insight on trends in the industry: The biggest challenge is keeping the resellers aware of product info, promotion and overall communication. We are seeing resellers and their client embrace higher end products and wireless. Resellers are using brands to differentiate themselves thus our requests for customization of brand for reseller clients is up. Systems builders are also looking for black products (about 10%).

Image Lan, the maker of ConfigSafe which enables a PC to be restored from a disc when all else fails, announced expanding from OEM to the VAR channel. Image LAN is seeing good traction because their product works on 98 and NT while Microsoft only works on XP. Image LAN also announced a new product, PIP, that enables users to move all your Internet settings, (url's, passwords…) from one pc to another and it fits on an usb memory stick.

N-able Technologies Network status software provides availability and performance management solutions design for service organizations. With N-able Technologies you can offer turnkey outsourcing solutions to new customers and gain the insight to re-engineer your service level agreements. Their company mission is to help the VAR's by creating a product that is focused on providing the end user with the data to make an informed buying decision.

PowerColor offers a complete line of next generation video graphic cards. Their new product Evil Commando 2 uses the new ATI Redeon 9700 chip set. The show has been very successful of them and allowed them to build their brand, make relationships and take orders.

Veo, the number two manufacturer of web cams, presented their new fall line of web, Palm and networking cameras. We are seeing interest from VAR's who are already installing the wire to add services. With Veo's low price points, VAR's servicing niche markets like safety, security and education can increase their revenues.

Altec Lansing presented their revised system builder program and new services to the system builder channel at the World Premier. Exclusive to the channel "Destroy in Field Policy", received an ovation at the world premier presentation. The program again reinforces their commitment and strengthens the infrastructure that supports their Company's system builder ("White Box") partners. Components of the program include new System Builder focused products, increased sales support, product demonstration tools, online training, product warranties and technical service and support, all of which are specifically tailored to meet the needs of the system builder channel.

Altec Lansing's product mix includes new speakers geared to customers served by the System Builder channel. The product line is comprehensive; including a selection of 2.0, 2.1, 4.1 and 5.1 speaker system configurations as a response to the varied market segments that the Systems Builders serve.

Altec Lansing is committed to your business and we believe that this new program will provide you with the necessary ingredients to succeed. Their newly redesigned website exclusively for our system builder partners is comprised of tailored information and marketing tools, including training content, downloadable marketing materials and other program information.

Kodak, the industry leader in production scanning, presented their first Kodak branded low volume scanner line. While they have manufactured low volume scanners for the OEM market, this new line comes with the assurance of the Kodak brand. They have packed high-end scanner technology into their new entry-level line that provides speed and the highest quality.

Logitech rolled out enhancements to their Partner Select Program and introduced the latest OEM products for both Logitech and Labtec product lines. The Partner Select Program is now an umbrella program for each channel with different partner levels enabling more participates and access to new products and technology. Logitech was very happy with reseller response and their feedback on product mix.

Unibrain is at the event to promote brand, gain attention and acquire new reseller partners. Unibrain is the only company that offers a complete range of IEEE-1394/Firewire solutions for the networking, storage and imaging markets.

Distinctive Technologies was at the show to present PC Pinpoint, a client app that tests the computers hardware and software. The knowledge-based program learns from past incidents and incorporates the resolution into the program. The show has been very successful and they have attacked many new resellers. Part of Distinctive Technologies' attraction is better customer service for the resellers and their clients including; tutorials, live support and online automated response.

Trident Microsystems unveiled its desktop XP4™ 3D graphics family setting a new price/performance standard for Microsoft's DX8.1/9.0-compliant graphics cards for less than $100, with 128MBytes of up to 700MHz DDR memory.

Kodak presented their new i200 Series Scanners. Loaded with innovative productivity and image quality features adopted from its highest speed scanners, Kodak's new i200 Series Scanners include the i250 simplex and i260 duplex models, each with capture speeds of up to 67 pages per minute - color or black and white. A unique dockable flatbed is available for scanning exception documents. Retail list price starts at $4,600."

For the best presentation we saw at VARVision click here.

To submit your news and highlights from VARVision and System Builder Summit or with comments, questions, please send an email to ChannelMedia Editor Keith Newman at keithn@telocity.com. We are always looking for information and insight that will make your business grow!

NEWS

Channel Digest

Dell will start selling an unbranded, low-price desktop personal computer to dealers catering to small businesses as it taps the so-called white box market, worth an estimated $3 billion per year. However, Dell's initiative is expected to account for less than 1 percent of its overall revenue, a company's spokeswoman said. White boxes are computers typically assembled by small regional players, often consultants to businesses with less than 200 employees, depending on the specific needs of each customer. Their cheapness and ability to customize are main reasons why people buy them. The initiative of the No. 2 personal computer maker puts it outside its long-held tactic of direct sales. The new computer, which will be sold in the United States exclusively, will have an entry price of $499 but does not include the monitor. Only dealers registered with Dell will be entitled to buy the new PCs. © 2002 Reuters

Quantum announced Network Storage University will host a national seminar series for storage professionals, "IP Storage - Extending the Enterprise," featuring noted author and consultant Jon William Toigo. The series will be held in 12 U.S. cities beginning Aug. 21 in Los Angeles. This new and much anticipated technology of Internet Protocol (IP)-based storage, including Internet SCSI (iSCSI), Fibre Channel (over) Internet Protocol (FCIP), Internet Fibre Channel Protocol (IFCP) and Storage Over Internet Protocol (SOIP), is the focus of the seminar, including an overview of what the technology is and how it will affect today's storage landscape. In addition to Toigo, Quantum is partnering with industry leading vendors to provide their views on this technology, followed by roundtable discussions where participants will have the opportunity to address specific questions to the experts. "IP Storage is the next evolution of network storage architecture and brings with it a burgeoning set of technologies," said Toigo. "As a result, there is a lot of hype which leads to many misperceptions and misunderstandings about the capabilities and limitations of the technology, and the appropriate fit for enterprise storage. The purpose of the NSU series is to sort through the hype and provide end users with the basic information they need to make intelligent purchasing decisions." The mission of NSU is to provide a summary level education to storage networking professionals that enables them to keep up with the ever-changing storage landscape. The IP Storage series, presented at no charge to participants, is presented by Quantum and co-sponsored by Cisco Systems, Crossroads, HP, Network Appliance and QLogic.

SCM Microsystems announced the release of Dazzle MovieStar 5, the newest addition to its digital video software line. MovieStar 5 combines an easy-to-use user interface with powerful editing features to provide home users with what they need to create their own professional looking movies. MovieStar 5's innovative user interface makes video editing the easiest it has ever been. Almost all video editing tasks can be completed in three mouse clicks or less. In addition, MovieStar 5 is the first real consumer video editing software to support Background Rendering, which means that the most time consuming and frustrating part of the video editing experience -- rendering a final project -- is cut down dramatically.

Platinum Consulting Group, a leading Customer Relationship Management (CRM) Solution and Integration Provider, announced today that it has become a PeopleSoft(R) (Nasdaq:PSFT) Certified Consulting Alliance Partner.

"This certification demonstrates our continued commitment to provide outstanding consulting services to our clients implementing PeopleSoft 8 CRM," said Troy Ostboe, Chief Executive Officer of Platinum Consulting Group. "We set our certification goals in order to ensure we provide the most up-to-date knowledge and skill sets for our clients. We're diligently committed to making each and every one of our PeopleSoft 8 CRM implementations a complete success. The completion of this PeopleSoft Certification solidifies our dedication and helps us maintain a high level of PeopleSoft expertise."

The PeopleSoft 8 CRM Certification program is a comprehensive process that provides both training in PeopleSoft's new products and technology through PeopleSoft University, and comprehensive testing to evaluate the knowledge and expertise of consultants to effectively implement, upgrade and optimize PeopleSoft products and technology.

"The extensive program and rigorous requirements enhance the expertise of our consultants," said Troy Ostboe. "This training, testing and knowledge are invaluable to our consultants, giving them tools to coincide with their talent."

Demand Management has been selected by Microsoft Business Solutions as an independent software vendor (ISV)/solution developer for its supply chain solution. The Demand Management Software Suite combines value with simplicity to complement Microsoft(R) Business Solutions' products and services aimed at smaller and mid-sized businesses. Seamless integration between Microsoft Great Plains applications and the Demand Solutions Software Suite is planned.

"Smaller companies often view supply chain management as an unaffordable luxury," said DMI President and CEO Mike Campbell. "Demand Solutions combines power and simplicity in our easy to use forecasting engine and data warehouse at a fraction of the cost of an ERP implementation. By working with Microsoft Business Solutions, we can now bring our software to the thriving -- but underserved -- small to mid-sized business market."

"The goal of Microsoft Business Solutions' family of products and services is to help smaller and midmarket companies do business with suppliers, customers and partners more effectively and efficiently," said Mark Albrecht, team manager, ISV team at Microsoft Business Solutions. "By integrating our solutions, our customers will be better able to meet market needs with a cost-effective, collaborative supply chain solution that integrates easily with other core operations."

Altec Lansing's system builder program has been established in order to strengthen the infrastructure that supports our Company's system builder ("White Box") partners. Components of the program include new System Builder focused products, increased sales support, product demonstration tools, online training, product warranties and technical service and support, all of which are specifically tailored to meet the needs of the system builder channel. Altec Lansing is committed to your business and we believe that this new program will provide you with the necessary ingredients to succeed, please take a look at each of the program details that follow: Altec Lansing's product mix includes new speakers geared to customers served by the System Builder channel. The product line is comprehensive; including a selection of 2.0, 2.1, 4.1 and 5.1 speaker system configurations as a response to the varied market segments that the Systems Builders serve. Altec Lansing models are designed with both form and function in mind; the speakers are aesthetically compelling, while also providing superior audio performance. This attention to the art and craftsmanship of our products assists system builders in gaining a competitive advantage as they offer a variety of top performing speaker systems to accompany any system package. White box packaging also provides a cost reduction from products in retail packaging.

Arrow Electronics recently reported second quarter net income from continuing operations of $.6 million on sales of $1.84 billion, compared with net income from continuing operations of $6.3 million on sales of $2.36 billion in last year's second quarter. As previously anticipated, the second quarter results include severance costs of $5.4 million ($3.2 million after taxes) associated with the resignation of the company's chief executive officer. Excluding the severance costs, net income from continuing operations would have been $3.8 million ($.04 per share). During the second quarter the company sold its Gates/Arrow commodity computer products business.

Forsythe Solutions Group recently launched an Information Technology Risk Management Practice that will help companies create less vulnerable, more recoverable and more secure IT infrastructures. The new practice will be part of Forsythe's Infrastructure Services Division led by David Nolan, former president of Comdisco Inc.'s Continuity Services and former chief operating officer of Telenisus Corporation, a security services firm acquired by Forsythe in January of this year.

With 31 years of experience in developing leading-edge technology infrastructures, Forsythe considers its IT risk-management group to be a natural evolution of its existing infrastructure services offerings. The IT risk-management group responds to a growing customer desire for high availability in the face of heightened threats of disruption.

"In today's political and economic climate, business leaders are being held accountable," said Nolan, Forsythe's vice president of services. "Fiduciary responsibility requires executives to know their vulnerabilities and take appropriate action. Forsythe is uniquely positioned to identify risks and solutions without bias towards a particular technology or solution alternative."

"The environment in which IT must support Business Continuity has changed dramatically during the last few years, and IT organizations find themselves challenged to bridge the widening gap between their capabilities and the demands placed upon them by the business," stated Bob Sibik, an industry expert who runs his own management consulting firm. "Forsythe is bringing a unique approach to Business Continuity by focusing on IT availability solutions that address the issues of transaction integrity and compute utility availability within the context of the business. Forsythe's services are further enhanced by the integration of their security expertise."

NEWS

Q&A with Brett Johnson, President of Targus
By ChannelMedia Editor, Keith Newman

Q. I know there are lots of things going on at Targus. Or, you're not the same old computer luggage company from way back when. Give us a quick update on the Company?

A. We're pleased with our transformation to a complete provider of mobile solutions but we have had our challenges integrating several acquisitions and brands. The past year, we have made much progress clarifying our product and brand strategy and I am very encouraged by the results.

Q. What are your big "push" products for Q4?

A. Our Q4 focus is launching PowerCenter, which is a new initiative with our Universal Power products, where we will sell the individual PowerTips for each mobile device separately. In other words, when a consumer enters one of our retailers that have launched PowerCenter, they will be able to purchase a Targus Universal AC or DC charger and then customize the individual PowerTips to suit their mobile needs. The beauty of our patented solution is that you only have to carry one charger to power and charge the most popular mobile devices, including: notebook computers, mobile phones, PDA's, digital cameras, portable printers, etc. We are launching PowerCenter in September and it will be a major focus of our presentations at RetailVision.

Q. Clearly, not all's perfect though in Retail Land. What would you like to see more of from your channel partners?

A. Our retail sales have been the fastest growing area of our business and a real engine of growth for us, so no complaints from me on this front.

Q. And, if you don't mind my asking, what can we look forward to in 2003 from Targus?

A. We are going to focus on the Targus brand to further establish our position as a complete provider of mobile solutions beyond carrying cases. In other words, you will see more product launches and innovation in our power, security and connectivity ranges and of course, PowerCenter, PowerCenter, PowerCenter.

ACP - There's $$$ For You in Refurbished Products
Since 1976 Advanced Computer Products (ACP) has created new markets for excess, class B-goods and refurbished inventory. ACP has the ability to remarket your products into 3rd tier and offshore markets thereby protecting the integrity of your present distribution channels. Give us an opportunity to show you how we can solve your inventory problems. Whether finished goods, work in process or component parts we can help. ACP has all the inventory solutions! So when your inventory problems arise give ACP a call.

Contact us: (714) 558-8822 or email David Freeman dfreeman@acpsuperstore.com.

Midsize Businesses Keep .NET Investments on Hold
By Gartner

A recent Gartner survey suggests most midsize businesses are still reluctant to deploy .NET because of confusion, and concerns about proprietary issues, the perceived complexity of the technology and its value.

Microsoft has invested tremendous effort and resources in developing a strategy for .NET, along with associated technologies, services and marketing campaigns. Though awareness of .NET is high among midsize businesses, understanding and buy-in is not. In a survey conducted late spring 2002 among North American midsize businesses, only 34 percent stated they were looking forward to taking advantage of .NET" (see Figure 1). Considering the conservative nature of midsize business technology investment behavior, this number is not surprising. More than 70 percent of midsize businesses delay investments in new technology until it becomes ubiquitous or the standard within their industries or until they are forced to invest because of regulatory or customer requirements, or business partner pressures.

To midsize businesses and the population in general, perception is their reality and midsize businesses do not have an overwhelmingly positive perception of .NET. The mystique that Microsoft built around .NET when it first announced the concept is partly to blame for the skeptical reaction. This is clear in how midsize businesses are responding to .NET with 33 percent of midsize businesses from the same survey stating they do not understand what .NET is. Perhaps even more telling are the same survey's written responses. Skepticism about Microsoft's intentions and lack of education about .NET are obvious. The most common explanation provided when respondents indicated their view of .NET fell under the "Other" category were as follows:

Despite improvements in retired Windows OSs, such as Active Directory, conversion of midsize businesses to Windows 2000 and Windows XP OSs has been no different in terms of midsize businesses' reticence to immediately convert to a revised platform. Facing discontinued Microsoft support and unavailability of new hardware with old OSs has pushed midsize businesses to take the plunge. Through 2004, broad adoption of .NET technologies by midsize businesses will not occur until alternative Microsoft technologies are retired and support is scaled back for these products (0.8 probability).

What is .NET exactly?

Microsoft's .NET architecture comprises the following three basic building blocks:

These building blocks are underpinned by development tools (specifically, the newly launched Visual Studio.NET) and what Microsoft calls ".NET experiences" (see "The Net on .NET").

Conflicting Trends for Midsize Businesses

The reluctance of midsize businesses to embrace .NET creates conflicts for these technology adopters. Many midsize business markets are heavily influenced and dominated by Microsoftcentric architectures. In addition, many independent software vendors (ISVs), systems integrators (SIs) and in-house development organizations serving midsize businesses markets are attracted to Microsoft technologies. Driving factors for this range from the low cost of entry, high-productivity rapidapplication development (RAD) tools such as Visual Basic, single-vendor support and the pragmatic perception of Microsoft as "a safe bet."

As Gartner has pointed out in previous research ("Developers Face .NET Framework Adoption Challenges"), the decision faced by Microsoft-centric IT organizations is when — not if — to adopt. In other words, the adoption of .NET is inevitable for the overwhelming majority of Microsoft-centric IT organizations because it is a cornerstone of much of Microsoft's next generation of products and services (see "When Should SMBs Migrate to Windows 2000?").

Reluctance to move to .NET creates a challenge for Microsoft in two key areas. First, Microsoft's ability to aggressively recoup its investments in .NET and leverage the advances within .NET in its own products are tied to its ability to migrate customers to the platform en masse. The faster Microsoft can move this user base, the faster and more aggressively it can leverage these investments in its own next-generation offerings. Secondly, hesitance to move to .NET opens potential competitive pressure from Java-based vendors hungry to find weaknesses in Microsoft's traditional markets. The more an organization may question the need to adopt .NET, the closer it may look at potential alternatives. Through 2004, negative perceptions of the costs and complexity associated with .NET will increase the movement to non-Microsoft platforms (Linux for example) by at least 10 percent of midsize businesses that will perceive this move away from Microsoft to be less disruptive and more costeffective (0.7 probability).

When to Consider .NET

Obviously no technology can be all things to all people and .NET architecture is no exception. Midsize businesses should consider more aggressive .NET adoption under the following circumstances.

.NET will find its most immediate return on investment (ROI) advantages among companies that have deployed or rely on software applications affected by e-business models (that is, interenterprise communications, collaboration and transactions conducted over the Internet) and also have a strong history of commitment to Microsoft OSs, middleware, applications and tools. Consequently the appeal will be strongest in midmarket segments of vertical industries such as financial services, manufacturing, retail, internal lines of business and many others. The appeal of .NET will create an immediate and aggressive adoption trend particularly for Web-based and next-generation smart-client solutions (user interfaces that mix both thin-client Hypertext Markup Language [HTML] and local, native graphical user interface [GUI] technology). However, there is little need to rush to rewrite most existing solutions under .NET. Rather, a gradual hybrid migration strategy will be most suitable for most Microsoft-centric IT organizations.

When to Consider Alternatives to .NET

In previous research (see "Microsoft vs. Java: An SMB Perspective") Gartner covered the competitive relationship between Microsoft and Java from the perspective of the midsize enterprise. For most, Microsoft will continue to offer the most attractive option between the two platforms, balancing productivity, cost of entry and vendor support. However, Javabased solutions will remain a viable alternative. Organizations concerned with the migration risks, costs and vendor lock-in associated with .NET should explore Java-based options. This is particularly relevant to organizations with a stronger emphasis on flexibility (for example, vendor selection, cross-platform, and so on) over productivity (for example, single-vendor suite, RAD tools and so on).

A Challenge of Perception and Value

Microsoft's challenge through 2003 will be to show that .NET offers advantages in ROI and to turn the considerable hesitance of midsize businesses around. The issue is one of messaging rather than technology. While .NET must certainly mature over time, its technical merits will not be the primary cause of concern. Rather, Microsoft must do a better job of presenting the technology to midsize businesses to more clearly articulate the value of the new platform as it applies to a larger Microsoft software strategy.

Bottom Line: For most midsize businesses, .NET adoption is inevitable unless they plan to move away from Microsoft software tools, products and architectures entirely. The question is, when — not if. Most organizations can avoid aggressive .NET adoption through mid-2003 while they allow the platform to mature. However, organizations that have not begun substantive .NET adoption plans by the end of 2003 run the risk standing apart from mainstream as .NET inevitably takes center stage among Microsoft's future software strategy. Alternative platforms, such as Java, remain viable options but will also introduce their own migration and adoption challenges. Gartner advises midsize businesses to begin to explore .NET's role in their IT strategic futures in the short-term with an eye to more aggressive adoption in 2003.

RESEARCH

Dataquest Delivers the Data

The difficult economic times are still having an effect on the server industry as worldwide server shipments totaled 1.08 million in the second quarter of 2002, an increase of 0.5 percent over the second quarter of 2001, according to preliminary statistics by Dataquest Inc., a unit of Gartner, Inc. (NYSE: IT and ITB).

"The weak business environment worldwide continues to have a great impact on the server industry," said Shahin Naftchi, senior analyst covering servers for Gartner Dataquest's Computing Platform Worldwide program. "Because of customers' uncertainty of their own business, purchasing high-end servers, changing to a new platform and signing big contracts are still deferred, which elongate the sales cycle. For the time being, customers are focusing on deployments that can yield quick return on investments by purchasing less expensive systems or upgrading their established systems if necessary."

The combination of Hewlett-Packard and Compaq moved it into first place in the worldwide rankings, with 30.5 percent of the market. Dell fell to the No. 2 spot, but increased its market share to 18 percent, up from 16 percent one year ago (see Table 1).

Table 1
Preliminary Worldwide Server Unit Shipment Estimates for 2Q02 (Units)

The United States server market showed a nearly 10 percent increase in the second quarter of 2002, with shipments of 482,647 units, up from 439,163 in the second quarter of 2001 (see Table 2). The merger of HP and Compaq had a significant effect on the US vendor rankings. As a result, HP assumed the No. 1 spot with 26.8 percent of the market. This pushed Dell into second place with 24 percent market share, followed by IBM, Sun and Gateway.

"Since the merger of HP and Compaq is still in its early stage, HP is still faced with the challenges of transitioning its product lines and integrating the two corporate cultures," said Jeffrey Hewitt, principal analyst for Gartner Dataquest's Servers Worldwide program. " On the other hand, the post-merger challenges facing HP may benefit customers if the company decides to offer better prices and attractive contracts to protect its installed customer base."

Table 2
Preliminary US Server Unit Shipment Estimates for 2Q02 (Units)

This is the second quarter of positive growth for the United States, prompting speculation that the region may be signaling the end of the market downturn. However even though there are signs of unit stabilization in the United States, the market has yet to show signs of consistent revenue growth. Gartner Dataquest analysts say that without a stable revenue stream, it is unclear whether many companies would have enough confidence to invest heavily in new server equipment.

These results are preliminary. Final statistics will be available soon to clients of Gartner Dataquest's Servers Quarterly Statistics program. This program offers a comprehensive, global market information service that analyzes and documents the server industry. To subscribe to these programs, please call 408-468-8000.

Gartner Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses consist of Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com.

SMB SWEET SPOT

What SMBs Want, and Why
By Steve Giles, President and CEO, Oculan

In the last issue we discussed the exploding opportunities for VARs looking to provide IT services to small to medium sized businesses (SMBs). Shrinking margins in the highly competitive "product" market continue to drive solution providers of all shapes and sizes towards the "services" market--and the higher margins that can be found there.

Yes, SMBs are demanding more and more IT services and outsourcing from their local service provider. But, that doesn't necessarily mean that VARs today generally have a good understanding of what kinds of solutions SMBs are looking for…or how they want those solutions delivered. It is critical for VARs and other local service providers to get a good grip on what SMBs want and why, and then find the vendors who are making SMB solutions that fit that profile. So, what's the profile?

My company and many others know that you cannot approach the SMB customer the same way you approach a Fortune 1000 company. That may seem obvious, but the fact is that until the last few years most technology has been built around serving really big companies with really fancy products that are really complex and really expensive. Companies that serve this market have been successful in no small part because their customers have really big pockets and can afford what they are peddling.

Not so for SMBs. When we formed our network management company, we talked to many SMB channel players and their customers to determine what the SMB market would respond favorably to. Here is a sample of statements we heard that helped guide our business strategy:

Essentially, what we found was that the SMB market for infrastructure management services was underserved in most respects-starving for technologies, tools, services, and support that was built with their unique needs in mind, not the big boys. And while these statements were made in connection with network management tools and services, we heard similar sentiments expressed across the board. So we kept talking and we came up with a new set of SMB requirements that we felt were prerequisites to success for any company wanting to enter the SMB space. They were:

Quick deployment. Simple to use. Priced for SMBs. Easily scalable for growth. Focused on business needs instead of technical fireworks. These are the characteristics that your typical SMB is looking for in a solution. What does it all amount to? It amounts to this: KISS……Keep It Simple, Stupid.

And so we built our business around the KISS principle. We developed a network management platform that was easy to use, easy to deploy, cost-effective, and most importantly, delivered as a monthly subscription service. With no hardware or software to buy and all updates, backups, and other typical add-on costs included in a simple, predictable monthly subscription fee, SMBs like the profile of our offering. And they are responding favorably to many other new SMB solutions that fit that profile.

I'm sure you are familiar with the phrase, "Build it and they will come." If you offer a solution that fits the guidelines of the KISS principle, and make it simple for customers to do business with you, then the customers will come. If you think about it, this really isn't rocket science. Follow the KISS principle, and we believe that any company intent on serving the SMB market is likely to get off to a good start and eventually find success.

After finding solutions to offer your customers that fit the SMB market profile, what do you need to do internally to transform your company into an SMB service provider? We'll discuss that in the next issue.

Oculan provides an appliance-based network management platform that enables SMBs and larger organizations to manage and secure their networks at a fraction of the cost and complexity of traditional software solutions. Voted "Best New Company", "Most Innovative Networking Technology", "Best Channel Program" and numerous other awards by IT executives in 2002, Oculan provides a monthly subscription service to monitor and manage security, desktops, network devices, system, vulnerability scanning and other net management functions.

Grab the attention of the top CHANNEL decision makers NOW! Put a contextual ad message in ChannelMedia where you know it will get read and for a fraction of the price of an ad in a trade publication!

See the opportunities at www.channel-media.com/mediakit.

FROM THE COMMUNITY

If You Build "IT", They Will Come!
By Amy Welch, Director of Vendor Relations, GreenPages

What does it mean to build a strong foundation? For Technology General Contractor GreenPages, Inc., located on the waterfront in picturesque Kittery, ME, it means hosting its Annual Solutions Summit right here at home!

Since 1992, GreenPages has been providing end-to-end IT solutions including consulting, system design, technology procurement and implementation to help customers meet their business goals. During the last week of July, GreenPages took advantage of its beautiful location on Badgers Island in Kittery, ME and brought together clients and partners from across the country for its Annual Solutions Summit.

The Summit consisted of three days of technology seminars, tech expos, corporate tours, executive meetings and social events including a lobster bake and a sunset dinner cruise off the coast of Maine. It was an ideal balance of cutting edge technology information, peer networking and pleasure. Participating vendors included Intel LANDesk, Citrix, IBM, StorageTek and Symantec, to name just a few. Our Solutions Summit empowers us to share our technical expertise and present solutions to our clients first hand, serving as both an educational and client appreciation event.

With harsh thunderstorms providing unpredicted entertainment while progressing down the coast during the Lobster Bake, GreenPages' clients, partners and employees joined together on our waterfront lawn to indulge on lobsters and steamers served by one of the local lobster pounds. The hot topic of discussion…Technology, of course! Clearing skies and warmer weather presented the perfect venue for the dinner cruise out to the Isles of Shoals off the coast of Maine. With views of the tugboats and drawbridges, historic lighthouses, magnificent sailboats and seascapes, technology challenges and successes were shared amongst peers. Conversations took place while experiencing the taste and smell of the fresh ocean air, the feel of the cool coastal breeze. Everyone welcomed and appreciated the balance of education and entertainment. "The Solutions Summit provided relevant information, great peer networking and good vendor ability. This event was geared to us, the client" stated J. Tara Wisdorf, Global IT Manager for Entegris.

Founded in 1992, GreenPages has received numerous accolades over the years for our innovative business model. In 1999, GreenPages augmented our core competencies to include a suite of service offerings. GreenPages continues to expand and strengthen our professional services offerings. GreenPages acts as a Technology General Contractor bringing together resources and providing solutions to align with our clients' unique business needs. Richard Bansley, III, Information Systems Offices for Bar Harbor Bank and Trust says GreenPages is "an excellent company that always strives to provide the best possible solution in a most effective way". GreenPages has built long lasting relationships with customers, partners, and suppliers to help businesses leverage technology to increase efficiencies and profits. Our Annual Solutions Summit is the venue we use to bring it all together.

The clients and partners left with an increased knowledge of technology trends and a better understanding of the history and culture in this quaint little New England town. The favorite quote shared at the GreenPages Summit? "GreenPages has redefined the 'V' in VAR", Jack Burrows, Director of Technical Services, Nursefinders. The message is clear: Provide a solid foundation and focus on your core competencies and your clients will come to you for all of their technology needs. They will turn to a solutions provider, a business partner they trust…GreenPages.

To contact Amy or to beg for an invitation to their next Tech/Lobster Feed contact Amy @ awelch@greenpages.com.

FROM THE COMMUNITY

POCs- A Golden Opportunity for the Channel
By Sridhar Ramanathan

For every adversity there's a seed of opportunity. At least that's how I see the current challenges in the high technology sector. Keith Newman's article "Get your MoFo Rising" struck a chord with me having just finished advising my client, a collaborative services company, on how to exploit the trend towards Proof-of-Concept (POC) in pre-sales. Most enterprise software vendors see POC as slowing down the sales process and even anathema to building momentum towards closing the deal. That's the old wisdom.

Here's what I learned from interviewing 30 enterprise software vice presidents of sales. Virtually all of them saw POC as mandatory for the customer building the ROI case to purchase. It might surprise you to learn that over 75% of software buyers now demand a "try before buy" experience-not a demo but a working POC in their sandbox. This is especially true of the SMB who don't have much error margin these days for capital investments or expense items.

So why POC? From the customer perspective, the POC is used to prove ROI before buying. What do customers say they want from the numerator and denominator of ROI calculations?

I believe that the customers' desire to prove ROI is a great opportunity for VARs and integrators who want to add value to the customer and differentiate themselves from direct sellers. In my interviews with the direct selling Sales VP's, I heard clearly that they are very hard pressed to accommodate 30-day POCs when their sales engineering teams are already stretched thin in terms of geographic coverage and bandwidth. Furthermore, software sellers are sometimes in conflict between leveraging software sales and selling professional services. The POC can be a political hot potato. Channel players can build the POC more readily into their value delivery systems. For example, integrators are more likely to be paid for some of the POC work than a software vendor.

And, lastly, one of the scariest parts of the POC for vendors is not knowing what the customer is doing with the software during the trial period. Channel players often have much more presence in the customer environment and visibility to intercede if the POC is off-track.

For all these reasons, I see the POC phase as a great opportunity for channel payers to shine in an otherwise gloomy scene. Good selling!

Copyright August, 26, 2002.

Sridhar Ramanathan is an independent management consultant focusing on revenue growth opportunities for early-stage enterprise software/services providers. He can be reached at sridhar61@earthlink.net or (408) 394-6719.

FROM THE COMMUNITY

Changing Channels
By Steve Cross

Here's what I don't get about our industry. Sometimes we keep on saying stuff that we know is complete BS. According to CNET News "Linux lost some ground to Windows last year, but are expected to climb in coming years..."

I have no idea what these guys are thinking, because also according to CNET, IDC says that Linux sales were down 5% last year and Windows sales were up 11%. That makes the swing 16%. If you are a Linux supporter, distributor, or fan, you better start worrying. This is the same effect Microsoft had on Apple, Palm, and at least 20 other companies.

Let me describe what it feels and looks like. First the target feels invulnerable, then well-defended, then under siege, then under attack, then underwater. Palm used to have a 90% market share, but now the PocketPC devices have them on the run. Their marketshare is probably under 50% by now. Watch for when it drops off the cliff, which is a real effect, sometimes known as a tipping point. When that happens, there is no rescue, no comeback. Game, set, and match. Over.

Heck, does anybody remember when Apple Powerbooks were the number-1-selling laptop line? Microsoft iterated and iterated Windows until it was GREAT! In doing so, they drove Apple over the cliff. Now Apple is a marginal player, with a few cool products. By the way, during the years, I have used CPM, MPM, DOS, UNIX, Mac Os, Windows 2, 3.1, 95, 98, and now Windows 2000 Professional. Up until now, the Mac Os was always the best I'd ever used. No more. 2000 is rock-solid, rock-steady. No crashes on my (very cool, very lightweight, very thin) Sharp UM10 laptop since the day I brought it home almost 5 months ago. It just works. And that's how Microsoft does it.

Microsoft will kill you with iteration. Just when you think you are defining a product niche, or a market, they will start cranking up their iteration engine. Watch for the reference design of their smart phones. They will be killing players in the smartphone space. Should be interesting to watch. Glad I sold my Nokia stock at 24.

Steve Cross can be reached at steve@crosschannel.com, 702-492-7472. Watch for his upcoming book.

FROM THE COMMUNITY

How to Establish Security Reseller Relationships In a Turbulent Technology Market
For Small and Ambitious Companies, Following These Simple Steps Can Lead Faster Growth
By Nicholas Hulse

One of the earliest, and most critical, decisions an emerging security company must come to is the direct versus channel sales model. If the company goes direct, it runs the risk of not being able to scale quickly enough to meet and support customer demand, especially in certain categories of the information security marketplace in which the products are commoditized. If it goes the channel route, your company risks being one of many forgotten products in a reseller's obtuse partner portfolio.

There are many obvious reasons to choose the reseller route - it allows your company to focus on its core competencies, developing killer security products, while working with local market technology experts to sell to an established customer base. But how do you ensure that your partnership really works and that your partners really sell your products to their customers?

First, it is important to understand the mind-set of the local solution or managed security provider. Their customers need their solutions installed and working yesterday, especially if they've been hacked in a way that significantly compromised the company's information. The client is scared and in need of support immediately. Rarely is there a time when these technology experts aren't working against the clock on behalf of their clients. What this means is that they have little time to review new security products, especially in categories that may be commoditized. Further, if they do decide to switch brands or add a new solution to their mix, they have to convince their sales and consulting teams that the new product or suite is better than what was being supported previously. This can take anywhere from 60 -120 days in a typical scenario.

For emerging companies to push through this red tape, not to mention an entrenched competitor, they have to be smarter and go the extra mile. This doesn't mean two days of golf versus one, it means giving the reseller something of value immediately, so that the provider pays attention to your products and messaging, and forms a relationship with your company as soon as possible.

If you follow the below three steps, your chances of creating influential reseller partnerships will be increased and thus get your product into the marketplace more quickly. And because hackers are increasing their attacks exponentially year over year, CERT recorded 43,136 security incidents in the first half of 2002, compared with 52,658 for all of 2001, there is not a better time to enter the information security marketplace with an aggressive strategy for delivering your product to resellers and managed security providers.

Step #1 Target solution providers that fit best with your company's products and growth strategies. In the case of Secos, we initially targeted the crème-de-la-crème Check Point resellers with our first North American product launch, and because our intrusion detection products were OPSEC (Check Point's certification) certified, there was a natural and synergistic partnership opportunity. We recognized this and courted these providers across the USA. However, often a large solution provider wows the company with big name partners and Fortune 1000 clients. Thus, the small company gets quickly lost in the mix because the numbers aren't there for the reseller's sales force to push the new product, or worse, they don't integrate with the partner's other products. Getting out of a bad partnership because critical upfront analysis and evaluation was incomplete costs both companies time and money. Technical expertise, easy integration into existing solutions and bids and shared, reciprocal growth plans are the keys to quickly establishing and consummating a relationship that can really impact their customer base, and revenues, quickly.

Step #2 Hire support staff with direct experience to support your channel efforts. While it can be a hard sell to talk an experienced security salesperson into embracing a channel support position, the benefits of doing so can be exponential. They have the expertise, and the Rolodex©, to target potential customers and then push hot leads to potential partners. Is there a better way to get a new partner excited about the relationship than by pushing a revenue opportunity to them? Probably not. Further, this is an excellent way to get a potential partner to review your product quickly and start discussing and formalizing a relationship. A smart reseller won't leave a hot new business opportunity on the table, and thus those long security product review cycles quickly disappear.

Step #3 Listen to your partners and embrace their feedback. If they ask you to tweak your customer support, tweak it. If they suggest changes to your install and support material, change it. The keys to a successful solution provider business are to provide a solution that can be deployed quickly, with great training and excellent post-installment support at an affordable price. As a partner, why would you do anything that hinders their success? And don't send out a how are we doing card and then make the changes. Have relevant, ongoing conversations with the reseller so that they understand your products and you understand their distinct needs. By loving them unconditionally your company will establish the traction it wants with partners and create barriers of entry to your competitors.

In fact, our detailed attention to the needs of, and the hard work for, our partners have led to surprising revenue opportunities. Orange County-based managed security provider Kryptec.net, was so impressed with our products and attention to detail that they chose to deploy one of our products, because they believe our support is bar none. There will never be a sales tool as powerful as the solution provider telling the potential customer that they believe in the product so much that they've installed it!

Certainly, the devil is in the details of building a program upon these simple steps, but if your emerging business is committed to creating industry leading products combined with a killer channel program (and truly adopts a solution provider focused philosophy), then it can go from no resellers to distribution agreements within six months, which will put your little company on the map and create the demand in the marketplace that it deserves.

Nicholas Hulse is vice president and general manager of Secos, an information security company located in Irvine, California. He can be reached directly at nick.hulse@secos.com.