1. Microsoft recently filed suit against one of its larger software partners, PC Connection, alleging that the reseller engaged in sales of counterfeit software. That suit, according to PCC's CFO Mark Gavin, has been resolved and the case was settled out of court. Microsoft alleged five different cases where counterfeit products were bought and sold and we couldn't validate any of them. Gavin maintained that PCC never intentionally bought or sold counterfeit software. Gavin declined to specify terms of the settlement. Microsoft represents approximately 5 percent of the resellers total sales. "We had a hard time understanding this one," said Gavin. My question: If there is a settlement whereby PCC would have to pay Microsoft, would they be allowed to use co-op funds?

2. Hardfelt: "On behalf of all of us at 800.com, I'd like to thank you for your loyalty over the past four years. I'm pleased to announce that we will be transferring the 800.com Web site address and our customer database to Circuit City as part of an agreement between 800.com and Circuit City." Such were the words posted on 800's site with the signature of Greg Drew, President, CEO and Founder, 800.com. Indeed, the falls came quickly to the cocky dotcom electronics retailer that raised $118M during its 4-year history. In its most recent fiscal, the company reportedly hit sales of $48M but quickly went into a free fall following 9/11. The company has sold remaining assets (customer database, URL, company name, logos, and trademarks) to Circuit City. Visitors are being redirected to Circuitcity.com.

3. Fun Facts: Would you believe that 164 million computers are more than 3 years old? And 65% of US homes have at least one PC. PC's are a replacement market. The questions is: How many suppliers can it support? What are the aftermarket products that can drive revenue? What are the new services that will continue to fund R&D?

4. Playing the Bounce, Part 3: Get into personal communicators like RIM and Treo from Handspring. These are disruptive technologies that will continue to grow and the ones who figure out customer needs will also figure out sales and support opportunities. Other hot categories for the balance of the year to heavy-up in: Utilities ­ notably anti-virus software. Look at Symantec, McAfee but tax and personal business titles are doing well too (i.e. Intuit, Nolo, Encore, Jasc, etc.). Finally, start looking deeper into online gaming or web services ­ depending upon where your focus is. There are annuity opportunities here and vendors who can pay to help drive awareness and traffic. This is good news. We didn't want to believe all the worries about software and web companies were going the way of the dinosaur and the desktop.

5. Former Creative Computer and Buy.com executive Roland Serna has recently moved over to Cnet Channel Group as AVP, Vendor Programs. Serna is promoting the integration of Cnet's "data dictionary" and other value added media programs for both resellers and vendors. Drop him a note at rserna@cnet.com.

6. Fry's had a fantastic GO in the City of Industry (Southern California). But that's not surprising given the amount of media and marketing the Company does around its store openings. They were even giving away a new Cadillac Escalade. The Industrial Revolution-themed store, #28 for the Northern California-based company, had lots of large mechanical and electronic machinery and red, white and blue colors throughout the store.

7. Stapling it together: Staples has a New Program (dubbed Back to Brighton) that has a unique concept: Drive Revenue and Profit. How? Buy smarter. Examples include fine-tuning the product mix to focus on the needs of small business and expanding the private label products program. Rollback new format to other stores fast but not where it negatively impacts expense line. At its core, Back to Brighton is an asset utilization play. The retailer plans to reduce its prototype to 20,000 square feet, decreasing square footage growth without sacrificing convenience as well as benefiting from a lower investment in fixtures and inventory. In the North American Retail business, sales for the quarter were $1.9 billion, down seven percent versus a year ago. On a 52 week basis, sales for the quarter were even with last year. Continuing a trend of solid improvement resulting from Back to Brighton initiatives, business unit income excluding special charges, increased eight percent versus last year to $149 million. During the fourth quarter, Staples opened 11 new stores in North America, with seven in the United States and four in Canada and announced plans to close 31 under-performing stores in the United States. In 2002, the company plans to open 75 new stores in the United States and 20 in Canada.

8. Commenting on recent results, BJ's president and chief executive officer Jack Nugent said, "We take pride in reporting BJ's eleventh consecutive year of improved profitability from operations. We are particularly proud that we were able to achieve sound comparable club sales and operating income increases in a significantly weaker economic environment." Net income for the year ended February 2, 2002 was $82.3 million, or $1.11 per diluted share, a decrease of 37% from $1.77 per diluted share for the same period last year. Still kudos to Jack and BJ's for pulling out the profit during extraordinary times. These guys don't get a lot of recognition, but I, for one, salute such impressive results.

9. On the heels of PayPal's successful IPO, Overstock.com Inc. filed for an initial public offering with plans to raise $36.8 million in a stock sale. Overstock, based in Salt Lake City, sells a broad assortment of closeout merchandise, from jewelry to housewares, and is now profitable. Overstock Chief Executive Patrick Byrne said the company made a modest profit of between $300,000 and $400,000 during the month of December, and expects to be profitable for all of 2002. In its SEC filing, Overstock said it had a net loss last year of $13.8 million, on revenues of $40 million. Revenues have grown from $1.8 million in 1999. Its model has caught the attention of other larger online retailers, including Amazon, which holds a 7.6 percent stake in Overstock.

10. Speaking of Amazon, its Chief Financial Officer Warren Jenson has resigned, right after helping to guide the company to its first profitable quarter. In a statement, he said: "I took this position with the objective of working with (CEO Jeff Bezos) and the management team to bring Amazon.com to profitability. While the decision to leave is a difficult one--it's the appropriate time for me to move on to a new set of challenges. I am grateful to Jeff and the entire Amazon.com family for a wonderful opportunity and experience. "Before coming to Amazon, Jenson had been chief financial officer at Delta Air Lines and had held the same post at General Electric's NBC before that.

In Memoriam: This issue is dedicated to the memory of Gene Horn, who passed away in early March of a heart attack. Besides his hearty laugh, warm smile and bold ties, I have a few fond memories of Gene. My first memory occurred before I even had met the popular sales executive. He sent me a handwritten note congratulating me on the launch of Computer Retail Week back in 1990, telling me how valuable he could see this publication being and how much such a media product was needed. And there he was again when we launched ChannelMedia only this time with an email. I was fortunate to have spoke and worked with Gene on many occassions and once just prior to his passing. While a few years had gotten in between us, in the way that it happens to a lot of us, we picked up the conversation without missing a beat. Same old Gene. He was right there with a pithy thought and a kind word, of course. In fact, in all of my years working with Gene he never asked for a favor or had the expectation of a future payback. Gene's thoughts were always heartfelt and sincere. He extended his hand to help and support or to just pass along a kind word. He leaves behind his wife Marci and his three sons. And we will all miss the exemplary individual who has left an indelible mark on our business. Marci is looking for memories of her husband's professional life via letters, cards and emails to share with her young children. She can be reached at marcihorn@earthlink.net.
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Catching Up with a Tiger
An Interview with Tiger Direct, Vice President, Bruce Matthews

Q. Tiger seems to be quite the beast of the direct marketing jungle. Are we missing something or are you guys firing on all cylinders?
A. TigerDirect more than doubled our sales in 2001 & so far in 2002 we have recorded some our biggest sales months ever. As you know, we are a wholly owned subsidiary of Systemax (NYSE - SYX) & as such do not break out our financials separately.

Q. What do you attribute that growth to? Do you think you are gaining market share, and if so, who are you taking it from?
A. It should be stated that our CEO, Gilbert Fiorentino, deserves a huge amount of credit with guiding/building Tiger into one of the major computer resellers in the direct channel today. As a company, we attribute our growth to the following 4 Specific Points: Relationships - with both our Vendor partners & our customer base. Bringing great deals direct to ready buyers! Focus - working to be the leading reseller of computer hardware / software / services to the Consumer & SOHO market. Integrated Marketing & Sales: combining catalogs / internet / opt-in emails / inbound & outbound telemarketing. Seasoned Management & Employees all working together to achieve and exceed our goals. As to market share, yes we believe we are taking from some that are now gone (ie: Egghead) & some that are re-positioning (ie: Zones) & from some of the survivors (ie: Buy.com). How much is hard to measure.

Q. Have you launched any new programs or efforts to reach deeper into your customer segment?
A. As to new programs, Tiger continues to focus 100% on our core strength - direct marketing of high tech products. We continue to expand our on-line marketing (via portal relationships, search engine optimization, affiliate programs, email marketing, etc) in addition to working closer than ever with our vendors to help them achieve their marketing & sales goals. We are gaining many new customers & selling more to our existing customers - again, by offering the most compelling deals possible. In addition, we have just launched TigerTV - selling computers via infomercials. This is the fastest growing segment of our business.

Thanks Bruce. Keep up the good work.
Interested parties may contact Bruce at bruce.matthews@tigerdirect.com.
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The Other Side of Fraud
by Gartner Group's G2

GartnerG2 Says 2001 Online Fraud Losses Were 19 Times as High as Offline Fraud Losses

More than $700 million in online sales were lost to fraud in 2001, representing 1.14 percent of total annual online sales of $61.8 billion, according to GartnerG2, a research service from Gartner, Inc. (NYSE: IT and ITB). Online fraud losses for 2001 were 19 times as high, dollar for dollar, as fraud losses resulting from offline sales. A new survey by GartnerG2 showed that adult consumers in the United States are beginning to adopt credit card company solutions designed to protect against online fraud. A Gartner Internet survey of more than 1,000 adult U.S. online consumers, conducted in January 2002, showed that 5.2 percent of respondents were victimized by credit card fraud in 2001 and 1.9 percent were victimized by identity theft (although respondents do not know whether the theft occurred online or offline). More than 18 percent of respondents are attempting to fight fraud by embracing two new credit card protection systems: Visa's Verified by Visa and MasterCard's Universal Cardholder Authentication Field (UCAF) standard and Secure Payment Application (SPA).

"After years of missteps, the credit card companies have finally got it right with their consumer authentication technology. Consumers are willing to adopt the easy-to-use password-based applications," said Avivah Litan, Vice President and Research Director, GartnerG2.

"Other security schemes, including public key infrastructure (PKI), smart cards (that the credit card firms also support) and disposable card numbers, receive far less consumer support," Litan said. "Most consumers are unwilling to take the extra steps required to use PKI, as the failure of the previous MasterCard/VISA sponsored PKI-based Secure Electronic Transactions (SET) standard clearly demonstrated. Consumers also believe the new Visa and MasterCard systems offer better protection than PKI or smart cards, showing that branding is far more important than technically robust security schemes."

The credit card companies are, however, not yet willing to take the next major step: inciting merchant adoption by universally lowering merchant fees. MasterCard does plan to partially incite U.S. merchants by making issuers, rather than merchants, liable for UCAF-protected transactions beginning in November 2002. Visa plans a similar shift in liability rules in mid-2003. U.S. merchants will, however, continue to pay higher fees for Internet transactions, which average approximately 2.5 percent vs. 1.5 percent for in-store sales.

"Consumers are interested in using these new security systems, which can significantly reduce online fraud. The credit card companies should, however, back up their belief in these systems by lowering fees for all merchants who support them," Litan said. "This would guarantee even more widespread adoption."

GartnerG2 is a new research service from Gartner that helps business strategists guide and grow their businesses. For more information on the report visit www.GartnerG2.com.
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Intel, CreativeLabs, RIM, UbiSoft, and much more
by ChannelMedia Staff

Creative Technology (aka Creative Labs) announced plans to acquire the remainder of graphics accelerator provider 3DLabs that it does not already own for about $103 million. "Creative has developed, owns and markets the world's highest performance audio silicon technology," said Creative CEO Sim Wong Hoo. "With our announcement today, we will also own the world's highest performance graphics technology and a leadership position in the ultra high-end graphics space." Sunnyvale, Calif.-based 3DLabs develops graphics chips favored by gamers for their ability to perform high numbers of calculations per second.

Research In Motion launched a voice-enabled version of its BlackBerry e-mail device on Monday, placing it at the center of rising competition among makers of cell phones and handheld computers. Waterloo, Ontario-based RIM said its BlackBerry 5810 combines the BlackBerry e-mail device with a wireless telephone, in the latest sign of growing convergence in the wireless communications sector."First and foremost it's a BlackBerry, and it looks the same...the only difference is it has an earbud at the top and a little place you can put the GSM SIM card," said Mike Lazaridis, co-chief executive, at RIM.

RedEnvelope, a specialty gift retailer that has catalog and online operations, said it has named Alison L. May as the company's president and chief executive officer. Ms. May, 52, whose appointment is effective April 8, 2002, most recently served as chief operating officer and acting chief financial officer at Gymboree. Previous experiences include serving as chief operating officer at Esprit de Corps and president and general manager at Patagonia. Ms. May, who has also been named to the board of directors, assumes her duties from two individuals at the company. Departing CEO Martin McClanan, 38, will leave the company in mid-April to pursue other interests after working at the company for two years, according to a company spokesperson.

OneSecure named George Everhart as its new president and CEO. Everhart brings to the position more than 25 years of technology management experience, from companies such as 3Com Corporation, Fujitsu PC Corporation and Apple Computer, Inc. As President and CEO, Everhart has a seat on the board, and Don Detampel, former OneSecure CEO, will move into the role of outside chairman. "OneSecure has all of the ingredients for an exciting and successful company," said George Everhart, president and CEO of OneSecure. "There are tremendous growth opportunities in the security market and OneSecure's innovations, starting with the in-line intrusion detection and prevention product, enable the company to shape and lead the security market."

Ubi: CSI. Ubi Soft plans to develop games for all popular platform based on the popular television series CSI: Crime Scene Investigation. The PC version of the game will be the first to ship worldwide in the latter half of 2003. "It's really great for us to have the opportunity to bring such a captivating series to computer and video games," said Yves Guillemot, president and CEO of Ubi Soft Entertainment. "This deal with CBS Consumer Products and Alliance Atlantis not only gives us the ability to satisfy the enthusiasm of all realistic TV show fans, but also an even larger audience. We are delighted to be partnering with Ubi Soft to bring CSI: CRIME SCENE INVESTIGATION games into the homes of millions of enthusiastic fans of the show. It is CBS' highest rated series and this is a very exciting concept for both CBS Consumer Products and Ubi Soft," commented Ken Ross, VP General Manager, CBS Consumer Products. "The series is enjoying much international success and Alliance Atlantis is thrilled that Ubi Soft has joined the team to bring exciting content and product to CSI fans worldwide," added Jennifer Bennett, VP Merchandising and Licensing, Alliance Atlantis.
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What are The Handhelds Guys up to?
by Sam Bhavnani, ARS Handheld PC Analyst

Palm's new i705 will revolutionize...Handspring's Treo will forever change the way we communicate...HP's Jornada 568 is one of the greatest handhelds ever...Palm isn't innovating...Handspring is bailing the Visor line...Pocket PC's are too feature rich... NEC and Toshiba are only targeting "verticals" and the "enterprise"...

Fact is, the handheld market is moving faster than a BMW on the Autobahn and this year has and will continue to be fascinating for all the players and industry-watchers alike. Let us pause for a minute and take a look at the players in this game (primarily Palm OS and Microsoft OS licensees) and where they are today. After that, we will segment the market and identify the hot products within each segment.

Palm Camp

Palm

Palm has been keeping itself busy lately. It recently introduced its wireless always-on e-mail device, the i705 ($449), a color version of its m100 series, the m130 ($279), and a 16mb color version of its m500 series, the m515 ($399). The i705 is the only always-on, always-connected Palm-based OS available on the market and the device is a huge design win, as Palm managed to build the antenna directly into the device. In addition, the i705 beat Handspring's highly-touted Treo communicator to market.

Palm mistakenly has billed the i705 as "enterprise" focused. While the device does have a place within corporations, Palm should not mistake the fact that a PDA/HPC is still a "PalmPilot" to many. The inclusion of AOL's instant-messenger is clearly aimed at the consumer market, while the public message Palm sent was that the i705 is clearly aimed at the corporate market. And for one-last weakness, Palm would have been wise to include 16MB of memory with the device.

The m515 is Palm's answer to Sony's ultra-thin 16mb color Clie, the PEG-T615C. While both units are priced at $399, Sony has had a two-month edge in sales, as its device was available in January while the m515 is just available now.

Palm has a long-road full of challenges ahead of it, however, this year the company has proved that it is different than the Palm of 2001. It seems to have turned the corner from its days of product delays and inventory gluts. The biggest challenge facing the company now, will be to convince corporate IT managers that its devices offer adequate security measures to protect invaluable corporate data.

Handspring

Handspring is betting the company on the success of its Treo communicator. The 16MB Palm-OS device is about the size of a deck of cards, costs $399 (with activation), and can essentially do it all (PDA/cell phone/e-mail/wireless web/SMS). The Treo is available on the GSM network and in the US is available through VoiceStream and Cingular. In Europe, the Treo is available through mm02 in the UK, Germany, Ireland, and the Netherlands, through Orange in Switzerland, through APE Telecom in Sweden, and SFT in France.

The Treo, which features a Blackberry-esque built-in QWERTY keyboard, will be a big hit for the innovative Handspring. The company that invented the Springboard expansion slot unfortunately took a misstep when it announced in a financial earnings call (in mid-January 2002) that it would eventually stop making the Visor. The announcement lit-up the Internet message boards like a pinball machine and the company had to clarify its statements. What Handspring is officially saying is the Visor line will be consolidated to consist of the Pro, Neo, and Edge.

It is likely that Handspring will be inactive as far as announcing any new products in the consumer-focused Visor line. The Treo line of communicators gives Handspring at least a chance in the corporate market, though its current partners, VoiceStream and Cingular, are clearly consumer-focused providers. Handspring faces a difficult future as it is now not only competing against other Palm-OS based products, but is now competing against wireless titans such as Nokia.

Sony

Sony's Clie line has and will continue to be a big hit with consumers. The company has found innovative manners to differentiate its line from the other Palm-OS based products. As an example, Sony, in some of its handhelds, has enabled the device to moonlight as a universal-remote control, and it has highlighted its multimedia capabilities such as built-in MP3 players. For more practical applications, Sony recently announced a sub-$200 16MB Clie, the PEG-S360, aimed at the entry-level crowd.

The company touts its screen resolution, multi-media capabilities, and form-factor as its key strengths. The problem is that the Palm operating system only helps Sony with the ultra-thin form-factor of its devices. Simply put, Sony should be using Microsoft's Pocket PC (PPC) operating system. The major PPC players today aim their devices towards the corporate market and highlight PPC's abilities in that arena. Fact is, for all the strengths PPC has in the corporate arena, the screen resolution and multi-media (audio and video) capabilities of PPC clearly have a huge market in the consumer space. Sony already has an existing relationship with Microsoft, as it licenses the Windows operating system for its desktops and notebooks.

Sony will likely continue to release interesting and innovative products as the year moves forward. The company will, however, need to recognize that, ultimately, it will be limited by the simplicity of the Palm OS.

Microsoft Camp

Hewlett-Packard

Hewlett-Packard's 540 and 560 series of Jornada handheld PCs have been very well received by both high-end consumers and corporations. HP breaks its line into two categories, "home and home office" and "business." The devices found in both are essentially the same. The Jornada 32MB 564 and 64MB 567 are in the "business" line and are priced at $549 and $599, respectively. Their "home and home office" counterparts, the 565 and 568, are similarly featured and carry the same $549 and $599 street price.

The biggest challenge Hewlett-Packard faces at this time is cost. The lower-end of the Jornada's, the 32MB devices, are overpriced at $549. To gain broader adoption of the Pocket PC format, a 32MB HP Jornada should be priced at $349. The 64MB devices should be priced at $499.

HP customers in Europe can look forward to Jornada 928, billed by HP as a "wireless digital assistant" (WDA), this summer. The GSM/GPRS device will act as a high-end handheld PPC device with built-in voice and wireless data capabilities. Unfortunately, US customers will have to wait until the end of this year for the device to hit the market . The biggest challenge the Jornada 928 and the other devices like it that will utilize Microsoft's Phone Edition will be battery life.

Compaq

Compaq's popular shiny and sleek iPaq handhelds have historically been plagued by shortage problems. The company is slowly righting these inventory problems, and iPaq devices are now widely available in both retail and the e-commerce/mail-order channel.

Compaq, like, HP, breaks its devices into "home and home office" and "business." The home line consists of the $499 64MB iPaq 3765, which has no built-in expansion slot, a must for such an expensive device, and the $599 64MB iPaq 3835, which has a built-in SD slot. The business line consists of three 64MB models, the $499 iPaq 3760, which has no built-in expansion slot, the $599 iPaq 3850, which has a built-in SD slot, and the $649 iPaq 3870, which also has a built-in SD slot and adds integrated Bluetooth.

The company has not announced plans for a convergence device as of yet, although Compaq is likely to announce its intentions in the next few months. One of Compaq's strengths is in promotions, and it is currently the only major handheld player with a compelling cash back mail-in rebate available ($50 mail-in rebate on the iPaq 3765 through May 25, 2002). Compaq has also been bundling its higher-end handhelds as giveaways with Evo notebook purchases that target small and medium businesses.

Toshiba and NEC

Toshiba's PPC device, the 64MB e570, has garnered excellent press reviews and is solely focused on the enterprise market. The $569 64MB is unique in that it features two expansion slots, one SD and one CF slot. The e570 is likely to find limited success due to its very limited distribution. Toshiba would be wise to leverage its retail strength in the notebook market, and offer the e570 with its notebooks.

Toshiba plans to bring a dual-band wireless PDA phone, the CET200 to market sometime this year. The device will operate on both CDMA 1xRTT and PCS networks and will likely compete with HP's upcoming Jornada 928 and other convergence devices that are expected to be announced by PPC vendors (such as Compaq) in the coming months.

In November, 2000, NEC announced its PPC device, the MobilePro 300. The 32MB $599 is similar to Toshiba's e570 as they both have dual-expansion slots (SD and CF) and are both targeted solely towards the corporate market. NEC faces severe challenges in the PPC space for two reasons. One, the company has experienced shipping delays and the product hasn't even started shipping in the e-commerce/mail-order channel. And two, NEC does not have any notebook or desktop computers available in the retail space, which will pose as a barrier-to entry for the handheld newcomer.

No Camp

Dell

Dell, the best-known computer company today, does not have a branded-handheld. Although Dell is not known for its engineering prowess, it should have its own PDA. Dell currently sells handhelds through its software and peripherals division, where it acts as a 3rd party reseller for players such as Casio, Handspring, Hewlett-Packard, Palm and Sony. Millions of handheld owners have proved that significant demand exists. Dell needs to recognize the fact that Microsoft finally "got it right" with its Pocket PC 2002 launch last year and begin selling handhelds alongside its notebook and desktop computers.

Apple

Apple, admitting failure, discontinued its first try at a handheld device, the Newton, way back in early 1998. It's time for the company to try again. Apple, which scored a big win with its original iMac is back in the limelight again, landing a Time magazine cover with its new flat-panel iMac and has another big hit on its hands with its iPod digital music player. Apple currently resells Palm and Handspring devices and would be well served by offering an innovative sleek-looking companion to customers of its desktop and laptop line.

Market Segmentation

The handheld market can be segmented into three distinct user groups, the "Handheld Organizer," "Wireless Handheld Device," and the "SmartPhone." The "Handheld Organizer" segment places an importance of simplicity and usability and will continue to be dominated by Palm-OS based products. This category will continue to be the largest segment for the next two years and will add narrow-band wireless capabilities. The easiest way to remember this group is to think "PalmPilot." Three hot products in this group are Palm's wireless $449 i705, Sony's $399 ultra-thin 16MB color PEG-T615C and $199 entry-level 16MB PEG-S360.

The "Wireless Handheld Device" segment is relatively small at this time, but is growing quickly, and will be dominated by Pocket PC-based devices. Targeted mainly towards the high-end, early-adopter crowd and to corporations, this group includes existing devices such as Compaq's Bluetooth-enabled iPaq and devices that are just on the horizon, including HP's Jornada 928 and Toshiba's CET200. The hottest Pocket PCs on the market today are HP's $599 Jornada 568 and Compaq's $649 Bluetooth-enabled 64MB iPaq 3870. The "SmartPhone" segment will consist of those devices that combine the PDA with the wireless phone. This segment focuses on minimal functionality in order to keep the devices streamlined and easy-to use. The devices incorporate good PIM features, solid battery life, and reasonable prices (sub-$400). This market, which is still in its infancy in the US, currently consists of three models, Kyocera's QCP-6035, Samsung's SPH-I300, and Handspring's Treo. The Palm-OS has the early inside track on this converged market but will face serious pressure from the Symbian-OS. Wireless industry leader Nokia has plans to bring its hugely successful Symbian-based Communicator 9210, known as "the Brick" in Europe, to the US early this summer. Handspring's $399 Treo 180 is currently the hottest product in this segment.

Contact Sam Bhavnani, ARS Handheld PC Analyst sbhavnani@ars1.com or 858-729-5374.
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Viking 256MB CompactFlash


MSRP - $119.99

CompactFlash is the latest "must have" product to hit the channel and if you sell digital cameras provides an excellent opportunity for incremental revenue. Viking has been a manufacturer of CompactFlash and Smart Media since the very first digital camera was announced, and in independent reviews has been confirmed as one of the fastest cards available (See www.dpreview.com for information). These products are guaranteed compatible with all major digital cameras, MP3 players, PDAs and are available in densities from 8MB to 512MB.


Viking Components Looking to Expand Retail and E-tail Reach...

With a 13 year history in the channel Viking is looking for a limited number of partners to expand its reach into the retail and e-tail space. The Viking product offering includes a complete line of desktop and notebook memory, CompactFlash and SmartMedia for digital imaging and upgrades for all make of Workstations and Servers. Partner benefits included limited competition, guaranteed margins and an aggressive MDF program in support of sales.

For information regarding becoming a Viking Partner please call Drew Ohmart at (800) 338-2361 ext. 2204 or e-mail him at dohmart@vikingcomponents.com or visit our website at www.vikingcomponents.com.
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Inside Intel
by ChannelMedia

Retailers may be able to open up shelf space in the next year or so if Intel finally achieves its goal of convincing hardware manufacturers to develop smaller, more modular systems. The chip giant, which has been promoting smaller systems that feature eye catching designs for the last several years to very mixed results is now taking the bull by the horns and has launched a pair of initiatives to help create smaller, more modular systems that will be easier to upgrade and expand. The first of the two initiatives, both of which were introduced last week at the Intel Developer's Forum in San Francisco, will be called TideWater. It will incorporate a scaled down version of the microATX motherboard running the Prescott microprocessor, a next generation Pentium 4 that will be in the 4GHz or faster range. The computer will feature a serial ATA hard drive connection, an AGP 8X graphics bus and USB 2.0 connection for peripherals. While Intel declined to reveal all of the details it is also expected to have wireless networking and features for home networking as well such as 802.11 a/b. The system will be designed for a smaller power supply and other internal components. These systems are expected to hit the market sometime next year. The second initiative is called BigWater and it will result in an entirely new look for PCs. Intel envisions small boxes that can be expanded and upgraded by sliding in and out modules. No need to ever open the box. A key feature of this will be a technology called 3GIO, short for third generation I/O, which is currently under development and is expected to be released in the early 2004 timeframe. 3GIO is expected to replace both PCI and AGP. It also helps to create smaller systems because it can use flexible cable to connect components rather than need traces on a motherboard. The company does not plan to give additional details on this program until September of this year. In the past Intel's efforts have in part been stymied by a lack of standardization among the components used in small form factor products. Since they could not be used from PC manufacturer to manufacturer, their unit cost was higher and peripheral companies have been reluctant to develop for them. So to prevent that this time Intel plans to start working with these companies, in a large part based in Taiwan, and get them to agree upon standardized form factors so that when Intel is ready the rest of the industry in high volumes.
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Service Net Warranty Programs Offer You More Margins...Today!

From its beginning, Service Net set out to do things differently...

Today, we continually push the boundaries of INNOVATION to create more value for our clients and their customers. This FOCUS is what has attracted some of the biggest companies in their respective industries. Recently we added Philips and Office Depot to our roster, and look for many more to come. The talented team we've brought together and the proprietary systems we've created to help run our clients' programs DRIVE our success. All this adds up to better SERVICE for them.

INNOVATIVE. FOCUSED. DRIVEN. SERVICE.

Let Service Net do things differently for you. We'll put the fire back into your warranty or service contract program. Let us show you how we can add more profits to your bottom line today. Email Tom Watson, National Sales Manager at Fire up my Warranty Program! for more information.
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Changing Channels
by Steve Cross

Remember the old play (and movie) ‘The Music Man"? That's the one about Prof. Harold Hill, a flimflam con man. The movie ends with "76 Trombones". But, it starts out with a whole bunch of traveling salesmen going from town to town on this train singing a song called "You gotta know the territory". Sort of a fun song. That's how they covered the territory in the old days, by train.

We all spend our careers getting to know the territory. There's a lot to know. Soft dollars, detailing, planograms, rebates, MDF, trade shows (RetailVision, CeBit, Comdex?). But it's not just the mileage, it's how well you know the entire environment along with the economic systems of your channel partners. Has anybody besides me been fascinated with taking a look at the economic systems within the channel?

From the vendor side, you can't really work with retailers successfully until you understand how soft dollars have become like heroin to them. Look at margins on volume products within the channel, and then look at the impact of rebates (net-to-zero and otherwise) and marketing programs as profit centers on the entire retail environment. Remember when a few chains were fighting rebates? I won't name any names here. Now they have their fists out, reaching for those net-to-zeros like everybody else. Knowing how to work with the highest-margin programs of your resellers may make you a more valued partner to them.

From the reseller side, how well do you know the internal pressures of the company man (woman)? Do you know how their internal organizations feel about the channel, or about your particular organization as a partner? If not, you really have no idea about what would make you a better partner for that vendor. It's a shame, just from the standpoint of your profits, because you can get a bigger piece of their promotional budget if you understand how their organization works. And it might make you a better partner, too.

It's all about knowing the territory.

Steve Cross works with mid-sized high tech companies to evolve their businesses. Since 1997 his clients have included Pinnacle Systems, Visioneer, Dazzle, Network ICE, Margi, Aladdin, Outpost.com. He was formerly sales vice president at Connectix. To discuss this topic with Steve contact him at steve@crosschannel.com or 408-528-7211.
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