PERSPECTIVES - Reseller viewpoint

The margins to be made in the UPS sector are more attractive than most resellers think.

There is no money in it and no way to add value. It's never beenn most resellers think. something I've seen any salesperson spending time on. It's not something that every PC needs - it's just an expensive extra.' That was the view expressed by one third party when asked about selling UPSs and it probably sums up the attitude of resellers towards them.

Yet some resellers do make money from UPSs - and not just the ones that specialise in power protection. Traditional systems resellers can make a very good profit in this market.

CS Systems is a 10-strong dealership in Llantrissant, just outside Cardiff, which specialises in Unix-based accounting and business systems. Managing director Kevin Link says it always specifies a UPS as part of the standard package and usually makes the sale.

'Primarily, we are a server-based company and it's of prime importance that the system is protected from the vagaries of the power supply system,' he says. There are more of these than many people realise, Link adds, and today's computers are not as good at coping with spikes and brownouts (see box, page 44) as the old serial-based mainframes used to be.

Link meets resistance from users, but works hard at persuading them to rethink. 'Many users don't see the need for a UPS if they have never had one before. So we have to explain that, with modern technology, they will inevitably encounter problems.'

The key is to look at the whole power protection system and its regulation, management and control, not just protection from a power outage. The higher specification units CS sells are profit-making items for the reseller.

At the other end of the scale, the business has to be purely reactive due to the wafer-thin margins available. Action Computer Supplies, for example, sells all of its products through its catalogue and shifts plenty of UPS products, but all of them by taking orders - not by selling the UPS.

'Our business is 100 per cent reactive. We do our best to help the customers make up their own mind,' says Fabio Torlini, networking product manager at Action.

Action sells APC, Best and Powerware UPSs, but 90 per cent of sales are APC, which is the clear brand leader. The sales are not to be sniffed at, even with this reactive model - about #2 million a year for Action.

That's about two to three per cent of its server and desktop sales, which total between #60 million and #70 million annually. That comes down to a hit rate on sales of about one in 10, which is not bad considering it is a reactive sale.

Torlini thinks it is good business and it's growing. 'Our sales on UPSs are probably up by 50 to 60 per cent. Our networking sales are growing as well, but I'd say UPS sales are growing slightly faster because people are becoming much more aware of the dangers.'

If awareness is growing, sales of UPSs should stay healthy and grow at a faster rate than the market. Current penetration is very low. According to George Leptos, business development manager at Chloride, at the point of purchase, only 25 per cent of servers are sold with a UPS as part of the package. Some 60 per cent of servers worldwide are operating without any UPS backup and where PCs are concerned, the figure is probably more like 95 per cent.

'The business opportunities for the clued-up reseller are enormous,' Leptos adds. 'In many cases, the smaller UPS represents only a fraction of the cost of the equipment that it is supporting. The margins on UPS are attractive - typically between 20 per cent and 30 per cent greater than on other computer equipment. Where medium-sized UPS systems are involved, the margins become even more impressive.'

And they are not, he claims - contrary to the views of the more cynical resellers out there - a difficult sale: 'Selling a UPS as part of an IT package should not be a complicated procedure. When customers realise how exposed their systems are to power problems, the UPS sells itself.

Also, many more businesses are now aware of the UPS and realise that it is not prohibitively priced.'

Prices have come down, but awareness is still low and resellers still mostly reactive. Under these circumstances, UPS vendors are, understandably, very keen to get resellers on board, so the packages on offer are attractive.

And as the market is so heavily dominated by one vendor, other vendors must go out of their way to attract attention.

Chloride, for example, provides free training schemes, presentation aids and has a sales management support team. There is practical support in the form of free power audits and site surveys and resellers are encouraged to sign up for its loyalty schemes that offer the chance to qualify for the company's cash-back programme. Other vendors offer similar schemes.

THE KEY PLAYERS

LIEBERT

In addition to its presence in precision air conditioning manufacture, Liebert is also a leading player in power control equipment, commanding about 12 per cent of the European UPS market. It is one of the world's leading UPS manufacturers with an annual turnover of more than $700 million.

Liebert's product range covers the whole spectrum of networking topologies, including offline, online and line-interactive UPS technologies for use in one-to-one, clustered and facility-wide power protection systems. This gives the company end-to-end products to suit installations from standalone PCs and small Lans up to multi-location enterprise networks and mainframes.

THE KEY PLAYERS

MGE

French-owned MGE, formerly part of multinational Merlin Gerin, is also one of the leading players in the worldwide power conditioning market.

It continues to be a dominant force in the UPS market in France, with about 24 per cent of the French national market and throughout the rest of Europe, where it commands approximately 12 per cent of the overall market.

MGE has coverage in every area of the mainstream market with products in every sector.

THE KEY PLAYERS

PK ELECTRONICS

Founded in Malaysia in 1982, PK Electronics is one of the leading pioneers in the development of power supply and management systems, with offices in the US, UK, Malaysia and the Netherlands.

In common with the other main players in the market, it has end-to-end products to suit applications from desktop to enterprise-class computing.

PK Electronics is particularly interested in the development of parallel redundant power protection systems. Its flagship product, the US9001, was the world's first online, modular N+1 parallel redundant UPS in a power range from 1 to 100KVa.

The more recent US9003 is the world's first line-interactive modular N+1 parallel redundant UPS and is designed for use in essential applications from 400KVa to 4,800KVa.