IBM?s decision to sell its network computers (NCs) through Northamber and Ingram Micro has provoked criticism from other NC players, after IBM channel manager Steve Voller said that NCs were commodity products unlikely to appeal to the value-add distributors.
IBM networking distributor Azlan is currently in discussion with the vendor about NCs and declines to comment until talks are concluded. But a source at the distributor took issue with Voller?s description of the NC as a ?commodity item with virtually no opportunity to add value?.
?The NC should be sold as part of a solution,? he said. ?It is on the add-ons that there is money to be made.?
Voller did not rule out a deal with Azlan, but said IBM?s priority had been to find a PC distributor and a broadliner to distribute the NC. Northamber?s appointment comes as little surprise as it is IBM?s biggest UK PC distributor, but the Ingram signing was a shock for CHS Electronics, Frontline and Ingram itself ? none of which had been told of the decision.
The reason for choosing broadline over value-add distribution is tied up with IBM?s view of the NC as a replacement for dumb terminals. ?IBM has a large installed base of 3270 and 5250 terminals, and while the NC does present other opportunities, it is the first product that is capable of replacing these products,? Voller said.
Oscar Rook, head of alliance marketing at Oracle UK, argued that a myriad of NC sales opportunities and channels will develop beyond the terminal replacement market.
?There will be an emerging opportunity for the NC as a retail electronic device sold by stores like Dixons, but at the other end of the scale we could see internet service providers offering it as part of an access package. There are all sorts of applications,? he said. ?But if it is not sold as volume replacements it has to be bundled as part of a solution, as there is no money in selling units in ones and twos.?
Dick Allen, European brand manager for IBM?s NC business unit, last week played down talk of the NC as a commodity product and said the firm wanted to pick up on distributor server and solution strengths. ?The IBM NC costs just over #500, but there are acceptable margins to be made on them,? he said. ?However, we don?t expect many people to just sell boxes because there is so much more to it. We want the customer to have a total solution.?
Sun is already shipping NCs in small quantities for pilot schemes. The company has based its whole philosophy around the concept of the network computer, and is committed to the NC as solution sell.
Peter Deane, Sun?s reseller partner development manager, describes NC sales as missionary work. ?It?s not box-shifting, it?s changing a whole computing concept,? he said. ?Sun will sell the NC through existing resellers, because it needs a solution sell, including servers, networking kit and the ability to integrate product into a company?s existing architecture.?
Deane believes NCs may move to a commodity sell a couple of years down the line, but did not understand IBM?s reasons for starting off with a broadline rather than specialist distributor. ?It?s horses for courses, but at the right time. What is needed now is some evangelising,? he said.
But Ingram business development manager Bruce Richardson said the distributor was able to sell NCs as a solution. ?We sell HP9000 and IBM RS/6000 servers, which CHS and Frontline don?t, and have put a lot of focus and expertise into our IBM team over the past year,? he said.
Wyse Technology has been selling Winterm terminals, its NC product, for over a year through specialists G Tech and Kerridge Networking Systems. The firm said it needed value-add distributors until the market needed less handholding, but signalled an opening to the fulfilment channel with the news that it wanted to sign up volume distributors Logitek and Metrologie.
There is still a need to market-make, according to Bernie Wheaton, Logitek business development director. ?We now have a more technical base, which was necessary for such a solution sell,? he said. ?Selling Winterm is different from selling terminals. It?s a long sale, with a lot of add-ons.?
Wyse European marketing director John Cummins agreed some sales had been add-ons to existing systems, but said Winterms were always a solution sell whether the customer was a greenfield site or not. ?Our resellers make double digit margins on the thin client itself, but also sell project management skills, servers, software and integration into legacy systems,? he said.
The majority of case studies displayed on the Wyse Web site are solution sells, involving at least additional servers and software. This is borne out by Winterm reseller KSE Computers, which uses the products as an add-on to sell its own accounting, distribution and manufacturing solutions.
Wyse?s resellers believe that NC/thin client technology is the future, due to low cost of ownership, security and ease of migration for users. It is also the future for dealers because of the margin to be made on a Winterm NC solution.
It remains an open question whether IBM will sign Azlan to handle NCs, but we can expect the answer in a couple of weeks. But during the 18 months since Azlan took on IBM?s networking kit it has built sales of about #50 million a year across Europe. This could persuade IBM that room exists for specialist distributor NCs to sit alongside the box-shifters.
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