Forecast 2003: If you are at all like me, reflecting back on the year that was, you're thinkin' "if it weren't for bad luck I'd have no luck at all." But let me say this about that: It gets better but not much. Without some new, key technology or new market to help boost the economy, we merrily plod along. (yes, I know: XML, web services, CRM, SFA, SCM, (ad nauseum). These are buzzwords waiting for ROI (notice I didn't say products, we have products that are placing themselves in these categories but until they show significant cost savings or revenue increases to clients they aren't moving. Put another way, in the words of highly regarded Gartner analyst Michael Haines, "I expect continued softness in the economy, and the technology sector in particular. The effect on VARs and Solution Providers will be accelerated consolidation and company closings. At the same time, several astute VARs will take advantage of the decline of others and will experience growth in revenue and market share by executing a clear focus on valuable solutions, strong markets (such as Federal Government or Healthcare), cost management and smart partnering."

My reseller amigo, Oli, offered this sanguine forecast: A strong 1st quarter based upon reasonably reliable forecast data from my sales team and clients. Then modest growth the other three quarters over the same quarters in 2002, said Mr. Thordarson, President of Alvaka Networks.

Great. Knock em dead guys. Don't get me wrong, I'm anything but a cynic or alarmist and like all of you I see the potential in wireless, security and CRM solutions. But so what. Potential doesn't put food on the table. We are all hopeful that web services can step up and meet a fraction of the hype but these are point solutions that are looking for whole product solutions (a Chasm Group phrase). Here's the big "non point." Point solutions are commodities. Take these on an "as available basis" but focus on products with "whole-product" opportunity - design, development, installation, service (all if possible).

Here are a couple more ideas:

Have a great new year.

Keith

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NEWS ChannelMedia Q&A: PLUMTREE

Sponsored by:

Portal software is one of the most exciting categories and the field is littered with players of all shapes and sizes. The largest player in the market is Plumtree. ChannelMedia recently caught up with their globe-trotting VP of Worldwide Field Operations Jim Flately to discuss the portal category and Plumtree's claim to the market leadership position. Before joining Plumtree, Mr. Flatley was Vice President from March 1999 to June 1999 at Siebel Systems. Prior to working at Siebel, Mr. Flatley managed a division of 700 sales operations employees across the U.S., Latin America and Canada for Network Associates from 1990 to 1999. At Network Associates, Mr. Flatley held sales and management positions responsible for both channel and corporate sales. Mr. Flatley worked at AT&T from 1988 to 1990 as head of sales and marketing for a custom software solution to the airline industry, and IBM from 1982 to 1988, in sales and marketing.

Q. Hey there Jim, I know you're an awfully busy guy this being Q4 and all but do you have time to give us an update on the Portal Space?

A. The portal market has continued to grow despite the recession in information technology spending, in large part because companies can deploy portals to increase the return on systems and information they already have. More recently, portal software has been combined with other Web technologies for collaboration, content management, search and single sign-on. The result is a richer environment, not just for presenting information, but for employees, customers and partners to work together. This is part of a larger trend in which the place where people interact with systems, get information and do their work shifts from the individual using Windows on a personal computer to the entire enterprise sharing documents, managing projects and participating in business processes via the Web. Goldman Sachs describes this business transformation as "enterprise productivity," as opposed to the previous emphasis on individual productivity. Gartner and other industry research groups have all described the same technology trend behind enterprise productivity, the convergence of Web technologies. Plumtree calls this convergence the Enterprise Web. We believe that the Enterprise Web will provide a new foundation for building a wide range of new, composite applications more quickly, at lower cost.

Q. Wow, that's great. But how do you manage to differentiate yourself in this heavily crowded market?

A. Over the past two years, vendors of traditional infrastructure have entered the portal market, offering the portal as an extension of that traditional infrastructure. Plumtree has become the only viable independent supplier of portal software. The result is a clear choice, between an Enterprise Web based on a single application server, and a broader, more open environment. Whereas the infrastructure vendors provide a toolkit for creating a portal user interface to the Web applications developed on their own platform, these vendors are not interested in creating a working environment that spans multiple platforms. While the application and application server vendors continue to argue that the portal should be embedded in traditional infrastructure, essentially as a new face to the old client-server stack, Plumtree is addressing the customer reality of heterogeneous systems. No other vendor will do this. BEA won't support IBM WebSphere, much less Microsoft. Despite their claims, SAP won't integrate PeopleSoft, Oracle won't integrate Siebel. The customer is left holding the bag. Plumtree's independence and openness are the reason Plumtree is the best integration partner.

Plumtree's other source of differentiation is our experience. Other vendors, offering a hodge-podge of different Web technologies that have never worked together before, have no idea what it will cost a customer to deploy a portal, and have not benefited from the battle-testing that Plumtree's products have undergone over the past five years. For this reason, no other vendor can offer the rich domain expertise and customer community that comes with deploying 400 portals, including 30 of the Fortune 100: 96% customer satisfaction, with 80% of portals live, 67% in less than six months. Plumtree customers include Ford, Pfizer, Procter & Gamble, Boeing and Starbucks.

Q. I have to ask, what is Plumtree's Channel Value Proposition?

A. Plumtree Software has been extremely successful in working with integrators over the past four years. Our success has come from the balanced strategic approach of working with the Big 5, as well as small and medium partners. CGE&Y, Deloitte Consulting, KPMG, Accenture and PwC have hundreds of trained consultants to react quickly and effectively should one of their customers require a portal implementation. They have sourced opportunities for Plumtree and in addition have partnered with Plumtree to successfully deploy enterprise portal opportunities. From the start, Plumtree has approached deployments with customers as a partnership. When determining the scope of the project, Plumtree assesses how the customer has deployed software in the past and which trusted consulting partnerships worked best for them. The approach with which they deploy software is often varied. Some customers demand that the software vendor deploy the software with no other partnerships. Others have a trusted consulting partner who is deemed the prime consultant. In all cases, Plumtree partners with the customer and trusted deployment partner by providing consulting "subject matter experts" who are a part of the initial deployment for at least thirty days, depending on the size of the project.

Q. Has Plumtree adjusted and supplemented its channel development efforts in any special or unique ways?

A. Plumtree has developed a "best practices" guide which is currently over 300 pages long. This document includes do's and don'ts with regard to deploying portals. Plumtree partners have access to this document and use it as a "how to guide" when onsite. With over 400 customers and after using the portal as the desktop at Plumtree for over four years, Plumtree has documented the experience in this comprehensive document. The challenges of the economy has reinvigorated the small consulting firm. Customers find that the talent and expertise in these firms is commensurate in some cases with the Big 5. Some of Plumtree's most active partners are small and medium partners. Plumtree's oldest partnership is with a partner call Project Performance Corporation (PPC) which is based in the Washington DC area. PPC has performed more deployments than any other consulting firm for Plumtree. Plumtree's non-dictatorial approach in working with customers to determine the best way to deploy the software has been a benefit that has resulted in balanced license to consulting revenue performance (75% license - 25% consulting on average). It also results in the customer determining how they would like to install the software. In the past they have paid 10 to 50 times to have the software installed. Plumtree's interest lie in achieving high customer satisfaction with quick time to install and high return on investments. We are not interested in never-ending deployments.

NEWS

Channel Digest

Intel recently introduced 10 server "building block" products, including five server boards, two server chassis and three RAID controllers, designed for OEM system builders and product integrators. Each new product is centered around the recently announced Intel(R) Xeon(TM) processor with 533 MHz front-side bus and the Intel(R) E7501 and Intel(R) E7505 chipsets.

"Intel is announcing a complete lineup of server platforms available in lockstep with our new processors and chipsets, and we are one of the first companies with 533 MHz front-side bus solutions," said Philip Brace, director of marketing for Intel's Enterprise Platforms & Services Division. "Intel continues to refresh and expand our server building blocks for customers, with new additions across the entire product line."

The centerpiece of today's announcement is five server board products for dual processor (DP) Intel Xeon-based server platforms. The Intel(R) Server Board SE7501WV2, Intel(R) Server Board SE7501HG2, Intel(R) Server Board SE7501BR2 and Intel(R) Server Board SE7501CW2 provide a complete line of DP server boards for Intel Xeon with 533 MHz front-side bus and the Intel 7501 chipset. The Intel(R) Server Board SE7505VB2, also for DP Xeon with 533 MHz, is designed for the 7505 chipset for both server and workstation applications.

The Intel Server Board SE7501WV2, integrated with the 1U Intel(R) Server Chassis SR1300 or the 2U Intel(R) Server Chassis SR2300, is optimized for such high-density server environments as high-performance computing or streaming media. The Intel Server Board SE7501HG2, integrated with the Intel Sever Chassis SC5200, is a high-performance 5U/pedestal platform for departmental and database management infrastructure. The Intel Server Board SE7501BR2, which is also supported by the SC5200 as well as the new Intel(R) Server Chassis SC5250-E, is a volume server offering high-bandwidth, powerful processing for e-Business and workgroup servers.

All these new platforms support the latest technologies, such as Ultra320 SCSI with embedded RAID 0/1, full-featured Intel Server Management version 5.5 for remote server management, and Intel(R) PRO/1000 Gigabit Server Connections for industry-leading network performance, reduced server bottlenecks and improved availability from advanced server features.

The Intel Server Board SE7505VB2, also integrated with the Intel Server Chassis SC5250-E, is a flexible DP server/workstation platform with integrated Serial ATA ports and an APG 8X slot for high performance graphics. Finally, for the value server segment, the Intel Server Board SE7501CW2 offers the benefits of a real server and provides versatility for small and medium sized businesses.

The new Intel Server Chassis SC5250-E is a value-optimized pedestal chassis ideal for the small business server or workstation market and includes features such as a shorter depth and flexible storage options (e.g. fixed drives, hotswap SCSI, or Serial ATA support). Completing the picture of building block elements introduced today is the announcement of three Intel RAID controllers for advanced data protection: the Intel(R) RAID Controller SRCU42L, the Intel(R) RAID Controller SRCS14L, and the Intel(R) RAID Controller SRCZCR. The new RAID controllers are based around the Intel(R) 80303 I/O processor and support the latest disk I/O interfaces: Ultra320 SCSI and Serial ATA. Intel also announced today that the Intel(R) Server Platform SRSH4 and SPSH4 will be upgraded to support the latest Intel Xeon MP processor with an enhanced two megabyte (MB) integrated level three cache at speeds up to 2 gigahertz (GHz). These platforms are targeted at demanding uses ranging from large-department data centers to mid-tier and back-end application servers.

To increase its focus on emerging markets for high-end communications and entertainment products, AMD has the Embedded and the Wireless Business Units within its Memory Group organization. The two business units will focus on customers' needs for high density Flash memory devices in embedded systems such as car navigation, entertainment systems, networking and telecommunications, as well as in wireless applications such as advanced cellular phones. Dr. Bertrand Cambou, group vice president, AMD Memory Group, has appointed Amir Mashkoori as vice president and general manager of the Embedded Business Unit. Cambou will assume the additional role of general manager of the Wireless Business Unit.

"With the recent successful introduction of our breakthrough AMD MirrorBit(TM) technology, including sampling of the industry's highest density NOR Flash memory, this reorganization allows AMD to crystallize our focus on customers for high density Flash memory products," said Cambou. "As a result, AMD can continue to deliver complete Flash memory solutions that enable the advanced features and functionality consumers demand for products in the wireless and embedded systems market segments."

In conjunction with these developments, Stephen Lapinski has been named vice president of system engineering and strategic alliances for the Memory Group. He will be responsible for AMD's strategic alliances and marketing, business development, and memory sub-system development activities, for the embedded and wireless market segments. In addition, Ian Williams has been named vice president of customer operations for the Memory Group. He will be responsible for regional and business marketing, product positioning and marketing communications, as well as quality functions.

Spinnaker Networks, a leader in the development of next generation distributed storage systems, has joined the Oracle® PartnerNetwork to provide network attached storage for Oracle users. The Spinnaker SpinServer 3300 is a revolutionary network attached storage solution that eliminates the complexities of storage management inherent in traditional NAS architectures, while offering unprecedented capacity and performance. The Oracle PartnerNetwork strengthens Spinnaker¹s relationship with Oracle, and demonstrates Spinnaker¹s commitment to our growing customer base of Oracle users, said Deborah Jones, director of Strategic Alliances at Spinnaker Networks. Through our collaboration with Oracle, Spinnaker is creating validated storage solutions for our joint customers, ensuring a reliable NAS platform that addresses Oracle users demands for data reliability, scalability and performance. Oracle is very pleased to work with partners through the Oracle PartnerNetwork, building end-to-end solutions for our customers, said Julie Tung, vice president of Global Alliances and Channel at Oracle.

NETGEAR recently tapped Michael F. Falcon, formerly of Quantum Corp., as vice president of operations. Falcon will oversee the company's Original Design Manufacturing business model and will provide leadership in the areas of material planning, master scheduling, supply base management, supplier quality and logistics.

"NETGEAR's rapid growth in revenue necessitates the continuous strengthening of our operations organization and processes," said Patrick Lo, CEO and chairman of the board of directors of NETGEAR. "Michael's wealth of expertise and experience will allow us to continue streamlining our infrastructure to operate at maximum efficiency and profitability."

Falcon came to NETGEAR from Quantum Corp. (NYSE:DSS), a leading provider of data protection systems. He was there for two years as the vice president of operations for the Snap Division, and was most recently vice president of supply chain management for the Storage Solutions Group. Prior to joining Quantum, Falcon was vice president of operations at Meridian Data and director of operations, strategic planning and supply chain management for Silicon Valley Group, a semiconductor equipment manufacturer. He also served in management positions at SCI Systems, Xerox Imaging Systems and Plantronics, Inc.

Salesnet has appointed Steve Dahill has joined the Salesnet team as Senior Vice President of Worldwide Sales and Marketing. With more than 20 years experience in developing and successfully executing sales strategies, Dahill has a proven record of exceeding his goals while working for several emerging and industry-leading companies including Sun, Raptor Systems, and Sybase. Dahill served as a business development executive at Sun Microsystems where he played a pivotal role in building the company's first partner sales channel and molding it into a multi-billion dollar powerhouse.

"As we continue to expand our SFA solution and reach global customers, we are excited to have an executive of Steve's caliber on our team," said Mike Doyle, chairman and CEO of Salesnet. "His successful management experience with industry-leading companies gives Salesnet an enormous advantage as we continue to grow and offer our customers the industry's best SFA solution."

At Salesnet, Dahill will be responsible for all facets of the company's sales and marketing organization, including executing growth strategies, strategic partnerships, and distribution relationships. In addition, he will direct the planning, execution, and evaluation of marketing programs to meet Salesnet's aggressive goals and objectives for 2003.

Plextor recently introduced the PlexWriter™ 40/12/40S CD-RW drive. Available as an internal 5.25-inch half-height drive or as an external drive, the new PlexWriter connects to computers (PC or Mac) via Ultra SCSI (SCSI-3) interface, which delivers a burst transfer rate of up to 20 MB/sec. The drive is targeted at both professional and non-professional end users who require the highest levels of performance and reliability.

The PlexWriter 40/12/40S features 40X CD-Write, 12X CD-Rewrite, and 40X-max CD-Read. Recording at 40X, the PlexWriter can create a 650MB disc in less than three minutes. A unique combination of features and technologies offers unparalleled recording reliability. BURN-Proof technology prevents buffer underrun errors, so users can multi-task during a recording session. PowerRec(TM) (Plextor Optimized Writing Error Reduction Control) technology is a sophisticated write strategy for stable recording at maximum speeds. Superior 40X digital audio extraction (DAE) eliminates pops, clicks, and hisses for superior sound quality.

"The new PlexWriter 40/12/40S is an ideal CD-RW drive for high-performance applications where speed and reliability are both imperative," said Howard Wing, vice president of sales and marketing for Plextor. "Plextor has received numerous requests for a high-speed SCSI drive from our sizable customer base in the professional audio recording market. These end users know that SCSI is still the most robust interface technology around. The PlexWriter 40/12/40S delivers on exactly what our loyal customers asked for -- high-speed recording with a SCSI interface."

Sharp Systems of America recently announced the newest 20.1-inch member of their premium LCD monitor line, the LL-T2020. The 20.1 inch UXGA high precision LL-T2020 LCD monitor is capable of displaying 1.9 megapixels (1,600 x 1,200), making the unit ideal for applications in healthcare, computer aided design (CAD), digital imaging and other demanding professional settings. The unit, which features Sharp's exclusive 10-bit gamma correction technology, is capable of displaying 10-bits of gray scale per subpixel for 16.77 million colors, which is sixty-four times the colors displayable by a conventional LCD panel. 10-bit gamma technology was originally announced in Sharp's 18.1" LCD monitor, the LL-T1820, which was recognized as 'the best LCD monitor we've ever tested' by Maximum PC. "Until we can find a better LCD, the Sharp (LL-T1820) will stay in our lab and serve as a benchmark against which other panels will be tested," wrote Maximum PC editor, Jon Phillips. Based on overwhelming demand, Sharp is now pleased to bring this industry-leading technology to a 20" LCD monitor.

"Because of its ultra-high pixel density, the LL-T2020 excels at superior-quality image reproduction, making the unit ideal for professional applications such as computer aided design, pre-press and medical imaging," said Greg Nakagawa, senior vice president and general manager of Sharp Systems of America. "The superior image quality coupled with the unit's premium features make the LL-T2020 monitor the ultimate digital imaging solution for performance-minded professionals."

NEWS

Plan Now For 2003

System Builder Summit™ & VARVision Spring 2003®
March 16-19, 2003
Hyatt Regency Grand Cypress, Orlando, Florida

System Builder Summit™ and VARVision® offer the ideal format for Vendors, System Builders, and VARs to learn about the latest technology products, services, and trends affecting the government, education, healthcare, consumer, wholesale, and SMB markets.

Through Private Boardroom Appointments, World Premieres, one-on-one meetings, presentations from Gartner analysts and other leading industry experts, and a wide variety of networking opportunities, System Builder Summit and VARVision provide a proven, effective format for doing business - no matter which market you serve.

Register/More Information: Call 603-471-4227 or 603-471-4225 or Visit http://www.varvision.com.

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.

What Do SMBs Seek From Professional Service Providers?
By T. Kempf, M. Yamamoto Krammer, Gartner

An annual Gartner survey of small and midsize businesses identifies SMBs’ vendor selection criteria for IT professional services. A vendor’s track record and client references tops the list of most-important sourcing criteria.

For our annual small and midsize business (SMB) “User Wants and Needs” survey, Gartner interviewed 122 small enterprises (annual revenue less than $100 million) and 74 midsize enterprises (annual revenue between $100 million and $499 million). The objective was to understand how important certain criteria are when SMBs select an IT professional services provider.

We asked questions about 14 selection criteria regarding the purchase of five application-based services: customer relationship management (CRM), e-commerce, enterprise resource planning (ERP), procurement and supply chain management (SCM). Enterprises were asked to rate each selection criteria on a seven-point scale — one indicating not at all important, seven indicating extremely important. The data shows the mean score recorded for all SMBs across the five solution sets. The four most-important and three least-important criteria are presented (see Figure 1).

The most-important criterion was whether the vendor had an established track record and client references. Other criteria that were rated fairly high include vendors’ demonstrating business process expertise, rapid time-to-market capabilities, industry specific expertise and the ability, through a network of partnerships, to offer a complete end-to-end solution, from business-strategy consulting to onshore (staff and services originate from home country) application outsourcing.

Although it is interesting to note the highest-rated selection criteria, it is equally interesting to analyze the selection criteria SMBs view as less important. Offshore (staffing and services originate from location outside of home country — e.g., a client in the United States contracts services from India) application maintenance and development capabilities were rated the lowest in importance. This was surprising to learn, given the sharp increase in use of offshore services by large enterprises during the past 12 to 18 months and the fact that offshore services can often be 20 percent to 30 percent less expensive than similar services delivered onshore.

Figure 1: SMB Professional Services Vendor Selection Criteria

Source: Gartner Research

Comparing this data to data gathered on what Tier 2 (less than $250 million in revenue per year) IT professional services vendors believe enterprises of all sizes value when selecting third-party vendors, it seems that enterprises and vendors almost see “eye to eye.” Sixty-two Tier 2 vendors were surveyed for Gartner’s 2001 market trends study (“Tough Times in 2001 Focus the IT Professional Services Market on Business Optimization,” ITES-WW-MT-0101). They listed their track record, technology expertise and cultural fit with clients (ease to work with) as three of the most-valued selection criteria. However, they did not rank their ability to offer a totally integrated solution quite as high.

Developing Vendor Messages: The data supports the idea that vendors selling into the SMB space should focus on creating a go-to-market strategy. They should highlight their ability to deliver fully integrated or repeatable IT solutions to specific vertical markets, as shown in project successes and client testimonials. This appeals to SMBs’ need for simplicity and responds to the conservative technology adoption profile of most SMBs that seek validation that their peers are conducting similar activities and being successful in them.

Core to this message should be the vendor’s ability to demonstrate a return on investment for the client by deploying a solution that addresses a specific business-process inefficiency. For example, deploying an SCM solution that allows suppliers to view current inventory levels of a midsize manufacturing enterprise with hundreds of relationships worldwide differs significantly from a midsize construction company that has only a few local relationships.

Many IS managers within SMBs see the need for professional services but struggle with making the business case and justification for the investment. Through 2004, only 40 percent of SMBs will articulate the business value of IT well enough to capture sufficient discretionary funds for nonutility initiatives (0.7 probability). Vendors should limit their marketing messages that focus on highly customizable solutions, their ability to host prepackaged solutions, and their offshore application maintenance and development capabilities.

SMBs cannot afford to wait or pay for highly customizable solutions. Most SMBs do not appear heavily influenced by vendors that can outsource prepackaged solutions onshore or maintain and develop applications offshore. Starting in 2003, vendors should revisit the topics of prepackaged solution hosting and offshore maintenance and development. Both issues, but particularly offshore maintenance and development, will become increasingly important to SMBs through 2003.

Bottom Line: Vendors can lower the barriers to gaining share in the elusive, yet lucrative, SMB market by understanding: 1) SMBs’ need for simplicity, driven by limited resources (human and capital); and 2) SMB IS professionals’ need to demonstrate business value for technology investments in products and services.

Using The Feature Neutralization Tool to Negotiate the Purchase of PCs
By Alexia El Wardani, Marketing Manager, ARS

Procurement professionals within the Notebook PC industry have much to quandary when making large volume purchases for their organizations. As dozens of manufacturers offer literally tens of thousands of different notebook configurations at tens of thousands of different price points, it is nearly impossible to ensure the purchase of the optimal notebook at the optimal price…unless, of course, you are privy to the practice of feature neutralization.

Feature Neutralization (FN), by its simplest definition, is the process of identifying the true market value of a product, calculated by the sum of its parts. To arrive at a product's FN, the product is first broken down into an itemized list of components. Then, once identified, each component is assigned a cost, and all individual costs are added together to arrive at that product's total neutralized price. Finally, after a product's neutralized price is uncovered, procurement professionals have the ability to identify if a product's price in the direct and retail channels is above, at, or below its true market value.

Using FN to Assess a Product's True Market Value in Relation to Its Channel Pricing

Take, for example, the Compaq EVO N610c 470037-757. This 2 spindle corporate, commercial thin and light notebook comes with a P4-M processor, 256 Megabytes of RAM, a 14.1 inch screen, and DVD/CD-RW, among other features. Currently, Compaq is selling this notebook direct for approximately $1,999. Yet with upwards of 40 feature specifications, deciphering if this product is over priced, under priced or right on the mark can be an overwhelming task. However, applying the basic feature neutralization model more simply brings this answer to light:

1. First the product is broken down into its individual components.

2. Then, each component is assigned a neutralized price.

Specifications
Values
Neutralized Prices

Processor
P4-M 2000
$1,036

RAM
256
$80

Display
14.1" TFT
$189

Hard Disk Drive
40
$250

Modem
56
$35

ODD
DVD/CD-RW
$250

VRAM
32
$80

*Only subset of values. Neutralized values are calculated via ARS'proprietary Neutralization methodologies.

3. Finally, the individual prices are summed, uncovering the product's true, assembled value.

Direct Channel Price
$1,999

Neutralized Price
$2,537

Value Difference
-21%

4. From here, it can be determined if the product is under priced, over priced, or right on the mark in relation to the market today. As shown above, this EVO is priced at 21% below its true market value.

So why is it so underpriced in the channel compared to its neutralized value? There are a few reasons why a product may be selling under (and in this case a great deal under) its neutralized value. For example, a manufacturer may be clearing inventory to make way for newer models or aggressively trying to gain market share. In this case, according to ARS Notebook PC Analyst Matt Sargent, the latter is more the truth. Compaq and Dell have been in a great battle vying for market share within the commercial thin and light notebook industry, resulting in a number of promotions and price drops dating back to around the beginning of July when the products first hit the market. But what ever the reason, a product priced at 21% below its true market value is a product at a great price. If you are in the market for a commercial thin and light and the Compaq Evo N610c 470037-757 meets your needs, then now may be the time to buy.

The Big Decision: Choosing A New Platform
By Ian Frazer Vice-President, Business Development Corporate Mentoring Solutions™ Inc.

First in a Two-Part Series

CMSI takes a look for a new platform for its latest web-based mentoring management product offering. We take you behind the scenes, deep into CMSI, as we follow the project, the options and the final decisions.

So, it was early October 2002. Our Rev 1.0 product, based on Active Server Pages (ASP) & using Internet Information Server (IIS) and talking ODBC to Microsoft SQL Server (see Figure 1), all running on a single CPU server (P III/933MHZ + Windows 2000 Server) has been doing fine in the marketplace but it is time to work on Rev 2.0.

We convened a committee one evening (i.e. a bunch of us got together in the lunchroom with fresh whiteboard markers and refreshments) and got right down to it. ASP was good as far as it went but after looking at the "want list" and the "wish list" of possible new features as supplied by staff and clients, plus seeing who was around of the available staff to actually do the work, we decided to make some changes:

• Rev 2 would be based around Java Server Pages (JSP) from the Java Enterprise Engine (J2EE) platform
• Using a J2EE server To Be Determined (TBD)
• Using ODBC to an SQL platform TBD
• Using a Server Operating System TBD
• Running on a hardware platform TBD

Aside from the unknowns, Rev 2.0 was looking pretty good at this point. So we tidied up the pizza & liquid refreshment containers (suspiciously alike to beer bottles…) and set some milestones & deadlines.

We needed to get a handle on the time to convert from ASP over to JSP. Ditto what parameters would be involved in selecting a J2EE server product. We still agreed that ODBC was good enough for our non-transactional product (i.e. fast response was not critical). As such, just about any SQL product might fit, depending on the price of the license(s) involved. The same argument went for the actual server platform we might require - this would be just about the last item to look into anyway.

Having set the big goals, we allocated staff as available & with appropriate skill sets, to the designated tasks. The Co-op students from the local college were thrilled to be turned loose on the JSP aspects of Rev 2.0, I must say! Apparently most Co-op's don't see much live code development until they graduate. They actually suggested a J2EE server product, Resin, almost immediately - solving one problem in the first week.

We began the conversion project by creating "Mockup Central" - where we started creating the Rev 2 product as plain HTML pages, adding in the new features plus look-&-feel items as we went along. This allowed all parties (i.e. sales, marketing, support, and management) to see actual layout designs & to get a feel for the new product and program flow.

Meanwhile, the more serious coders were doing some benchmarking of three possible SQL platforms (Oracle 9i, SQL Server 2000, and MySQL 4.0) using some standard JSP code they had created. We ran the first two on Windows 2000 Server + latest Service Packs ala Microsoft. We ran the MySQL on Linux, more as a joke than as a serious contender really. All three tests used the same server platform but we switched hard drives for each different installation. This allowed us to easily & quickly repeat tests or add test items as required. Imagine our surprise when MySQL was approximately 1/3 faster than either of the other two products! We got a little more serious with the Linux implementation after this point and optimized it with the Debian version of Linux.

After checking the licensing costs to actually implement each of the three SQL platform choices, and taking into account the performance tests, we choose to go with MySQL on the Debian Linux platform for our production environment, although still supporting ODBC to SQL Server and Oracle 9i.

After conducting an RFP for possible server platforms, we decided on 1U rack optimized servers with dual Xeon CPU's and 2GB of memory. We considered IBM, HP/Compaq, Dell, and generic white box options. We were surprised at the 50% differential between the brand name options and the white box offering. We selected the white box product for our production and development server platforms. Due to the price, we even added two extra servers as service backups to the original seven we needed. The dealer made us deal too - for an extra $10.00 we got 2.4GHz CPU units.

In the meantime, the Sales Department had been going around to our clients & prospects and actually telling them what we were up to! Now we had clients actually signing contracts for delivery of Rev 2 "real soon now". The pressure was on to deliver.

To be continued in the next issue of ChannelMedia. To subscribe visit www.channel-media.com.

Ian Frazer has over 27 years experience in the IT market, mainly on the West Coast. He has published textbooks on network design and has taught network design courses at the college level for 6 years. He joined CMSI in Aug 2001. CMSI has been in the mentoring management business since 1978 and is considered a leader in that field. www.mentoring.ws

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FROM THE COMMUNITY

Changing Channels: Pulling the Plug on a Channel
By Steve Cross

In the channels...we're always figuring out ways to beat each other up for better prices, more support, better marketing, more soft dollars, etc., etc. That's okay, it's just a part of business. Some people are neophytes or morons, however. Those people start thinking they can replace an efficient channel with some internal organization, and they're just wrong. Look at IBM and its withdrawal from retail in 1999 (or was it 2000?). They incurred huge costs bringing their Web business up to snuff so they could handle consumers. That now appears to be a bust, because they're sniffing around with a line called NetVista that they are huckstering on TV with a neat commercial that looks like a mini-infomercial. How soon before they start calling you Retailers for re-entry? Do other industries do the same crazy stuff as we do? Of course.

Look at the airline industry - what a mess! And the natural tendency whenever business is bad....pull the plug on your channel...take it in-house...cut your losses. Folks, this is a losing strategy. And we all hear this strategy from friends, clients, coworkers, etc.

Let's take a brief look at what the airline industry just went through. Disastrous losses (pre-September 11), bad business model (hub and spoke don't work, yield management pricing doesn't work for commodity products like coach travel because it encourages you to sell seats below cost, just to fill the seats....sound familiar??). And the airline industry decided to pull the plug on their channel by firing the travel agents. They figured an industry-wide savings of 5-10%. Know what they have saved so far....precisely ZERO!

When you kill a channel its functionality must be replaced. To service the customer, you must be able to sell them tickets (or computers, or software, or peripherals), provide customer service that replaces or exceeds the level of service the customers were receiving. That's the bind the airlines are in now. Customers do not know how to plan travel without an agent, so the airlines are providing a higher level of on-line support and telephone support than they were before firing the travel agents. These services cost money. About as much money as they were paying the agents, except customer satisfaction has fallen to a new low. This is an unmitigated disaster for the airline industry, which is now being called by some the worst managed industry in the world.

Look at the airline industry, follow Rodney King's advice, and just get along, you knuckleheads. And by the way, be gentle with IBM when they come knocking this time. Great company. It'll be nice to have them back in our channel.

Steve Cross can be reached at steve@crosschannel.com, 702-492-7472. He consults on strategic sales, marketing, and channel issues. Watch for his upcoming book, "Changing Channels".

FROM THE COMMUNITY

Why an Integrated Intrusion Detection System?
By Anson Lee, Product Manager, Symantec Corporation

While standalone point-products like personal firewalls and antivirus software have long been regarded as sufficient protection against the myriad of Internet threats inherent in our connected world, the Code Red and Nimda worms of 2001 changed all that. These worms could pick and choose points of entry based on the security roadblocks they faced, thereby fooling even the best antivirus and firewall protection available.

These "blended threats" (so named because they can use many methods to compromise a system) proved to be a formidable challenge for security administrators and consumers alike. They manage to find ways to compromise disparate security precautions, including the best firewalls and antivirus software available. Such 'intelligent' threats have given rise to equally intelligent security devices known as intrusion detection systems.

Intrusion detection systems are supplementary to traditional firewall and antivirus software protection, and provide an intelligent layer of security that detects Nimda-like threats based on their attack signature. Intrusion detection systems look for unique network activity that is consistent with the malicious behavior of a virus, worm, or hacker.

These threats can have an enormous economic impact. The Nimda worm, which reared its ugly head on September 18, 2001, was set up to insert malicious code into executable files, change account privileges, reconfigure network shares, make registry changes and inject script code into html files. Computer Economics estimates that Nimda had an economic impact of $635 million in 2001 alone. The blended threat Code Red was even worse, with a calculated global cost of $2.6 billion.

Enter intrusion detection technology. Intrusion detection software adds another layer of security by examining the actual content and actions of Internet traffic for malicious code and attacks. Ideally, it will be integrated with a firewall product, identify intrusions based on their signature and then automatically trigger an appropriate response, in many cases terminating the Internet connection so that the malicious packets are dropped before they can cause any damage.

An intrusion detection system runs continuously in the background, monitoring the network traffic flowing in and out of a computer. It looks for traffic that is suspicious, abnormal or matches that of a known threat. When it notices activity that exhibits such a suspicious pattern, it alerts the user or takes an appropriate pre-determined response. In a good intrusion detection system, the user can configure the level and type of suspicious behavior that is considered malicious and then set a different policy for handling each type of suspicious behavior.

Intrusion Detection Systems Compliment Firewalls and Antivirus Software
Using multiple layers of security is the most effective method of deterring the blended threats of today. Intrusion detection, firewall, and antivirus technology provide complementary functionality; each layer provides protection, and the compromise of one layer does not necessarily ensure the compromise of the entire system.

For example, firewalls are an important component of any security system, but firewalls do have some limitations. A firewall serves to block access to certain vulnerable ports on a computer, but must leave other ports open for legitimate network traffic. In addition, firewalls can only monitor connections between networks. Once a blended threat gets behind a firewall, it will go unmonitored. This leaves a computer open to attacks through legitimate open ports and from within a system or network.

Similarly, antivirus software will scan e-mail and other files that come through open ports to search for viruses, but will not be able to recognize subtle traffic that appears legitimate. Intrusion detection provides the necessary third layer of security by scanning all traffic to look for suspicious behavior and activity. Once identified, the intrusion detection system will alert the user and either provide suggestions for the appropriate response or take auto-corrective action.

Working in combination, all three technologies can effectively thwart Code Red and Nimda-like breaches. An intrusion detection system can identify suspicious activity, a firewall can block it from entering a user's system, and antivirus software can discover malicious backdoors they might leave. Therefore, a successful security implementation will include provisions for all three technologies.

Although each security layer can be implemented independently, there are several benefits to using an integrated solution. Tight integration eliminates the need to purchase, install, and support individual products. It also obviates the problems of incompatible software, overlapping functionality, and cumbersome support mechanisms that accompany non-integrated solutions.

What to Look for in an Intrusion Detection System
The complexity and feature differences in intrusion detection systems can be confusing for resellers and consumers alike. Stand-alone desktop systems will need to employ a different type of intrusion detection than a large corporation with thousands of workstations. Still, there are a couple of important points to look for when selecting any type of intrusion detection system.

First, an intrusion detection system should offer an easy and quick way to obtain the most up-to-date attack signatures. Security software is only as effective as its latest update, which underscores the significance of having the most efficient updating mechanism for keeping all components current with the latest threats. Good intrusion detection systems will search for and install updates automatically, in the background without any user intervention.

Second, a good intrusion detection system will be integrated to work seamlessly with other security measures (like a firewall or antivirus software). As mentioned earlier, such integration not only simplifies the task of purchasing, installing and supporting individual products, but also, more importantly, makes it easier to obtain the most up-to-date attack signatures from the same vendor.

As evidenced by the complex security threats still plaguing the computers and networks more than a year after their discovery, blended threats are expected to appear with greater regularity and complexity, thus signaling the urgent need for integrated tools that provide effective protection at multiple layers, a holistic approach. The intelligence in an intrusion detection system plays a vital role in- both identifying and eliminating new and complex threats.

When seamlessly integrated with firewall technology and complemented with a robust antivirus solution, intrusion detection offers users the most intuitive and formidable weapon against the malicious Internet threats of today and tomorrow. Both stand-alone computers and enterprise networks will benefit from implementing a security policy that includes an intrusion detection component.

Anson Lee is a product manager at Symantec, and is responsible for assisting in the management of the entire line of Norton Internet Security products. Lee works closely with the product development team to determine product strategy, analyze industry trends and customer needs. He is also responsible for competitive assessment, product positioning and pricing.