Bull may have started out rooted in mainframe traditions, but it eventually entered the Unix and PC businesses. The hardware vendor, formed from a merger between US company Honeywell and French national computer manufacturer Groupe Bull, is currently mounting a major effort to sell more products through the channel.
The company's Unix strategy is based on badged IBM RS/6000 machines, which it sells as the Estralla. Two years ago, Bull launched a symmetrical multiprocessing machine based on the Power PC chip and running under Unix.
Called Escala, it was a direct rival to machines such as Digital's Alpha 2100. At the time Bull had 75 resellers, but planned to increase this to 125 by 1996.
The company's then director of open systems and software, Rhys Torrington, said at the time that many of Bull's resellers were niche market players and there was a need to expand into the wider market. Bull has always had a strong base in local government and the utilities, but is less of a presence in the commercial world.
Eric Hall, director of marketing and services at Bull, admits the company's strategy in the reseller channel has not been successful. 'We are still not doing enough in the indirect channel. The proportion of our Unix business that is going through the channel is still less than a third of sales,' he says.
Earlier this year, Bull announced its Ascent initiative, which is intended to provide a better service to its resellers in terms of discounting, help in porting software to Bull's machines, benchmarking and pre-sales and post-sales support. This year the company has signed 12 new partners, bringing the total number of resellers to 95.
Although still not near the 125 promised by Torrington in 1994, the number is significant, says Tom Allender, manager of channel marketing at Bull's enterprise information system division, as a number of resellers in the original programme subsequently dropped out. But Allender admits that only 20 per cent of Bull's Unix products are sold through the channel.
One of the first moves under the Ascent initiative was an offer of free training for resellers. It has been widely taken up, says Allender. In principle, the closer the resellers work with Bull the higher the level of discount they get.
Five years ago, Bull was in severe financial difficulty and some analysts predicted it would not survive as 60 per cent of its business was coming from the public sector. Bull had to fight hard for its share of public contracts in the 1970s: it was the preferred supplier to government and the utility companies in France, but ICL held that role in the UK.
At one point, Honeywell threatened to withdraw from the UK altogether after a contract for Severn Trent Water Authority was awarded to ICL - in spite of the fact that the authority wanted to use Honeywell kit.
But gradually the company gained a stronghold in the public sector, which served it well when it hit turbulent financial times in the early 1990s.
As financial ruin loomed, the company was faced with a stark choice: find new markets or concentrate on its core business in the public sector and put together a plan for the future. Bull chose the second course, but is now hoping to expand into new areas.
'We are keen to break the dependency on the public sector,' says Hall.
'We want to get into the commercial sector.'
Like many hardware vendors, Bull shifted its direction out of box-shifting to software and services. It set up a systems integration centre and, says Hall, tried to become more customer focused.
Hall says: 'We decided to go for profit rather than growth five years ago, but that strategy actually brought growth in its wake.' Last year Bull's turnover grew 20 per cent and sources close to the company suggest this year will see a further growth of at least 20 per cent.
'Our aim is to double the size of the company twice before the end of the century,' he says.
Bull's OEM agreement with IBM has done much to help the company's rise in profitability. By badging the RS/6000, Bull saves research and development costs. As Torrington put it two years ago, 'we just took the IBM logo off the front of the machine and put a tree (the Bull logo) on'.
In fact, the OEM deal is more complex than that. Hall says: 'Not everybody realises that this is a genuine cross-licensing agreement. A lot of the software in the SMP machines that IBM sells is Bull technology.'
The company made a foray into the PC market with its Zenith Data Systems division, but in February this year sold the operation to Packard Bell/ NEC. But Bull's involvement with the PC business still exists in the form of a European-wide distribution agreement with Packard Bell.
According to Robin Marriot, Zenith marketing and communications manager, the sale of Zenith to Packard Bell had a completely different effect in the US - where the Bull name was not so strong - than in Europe, where Zenith machines were sold into the Bull corporate accounts.
A new company, Zenith Data Systems Europe, has been set up. It is owned jointly with Packard Bell: Bull has a 51 per cent stake and Packard Bell 49 per cent.
'The brand is owned, developed and manufactured by Packard Bell, but Bull is responsible for sales and marketing in Europe,' says Marriot.
The company is also moving toward selling the systems totally indirectly and will appoint a distributor in the near future.
'From December our channel partner will deal through our distributor.
Packard Bell has a factory in France capable of producing a million systems a year on a just-in-time basis, but it has a 10-day turnround which does not meet the needs of our dealers. By appointing a distributor, our dealers will be able to get a 24-hour or 48-hour turnround,' Marriot says.
Zenith Data Systems Europe's operation will be divided into three distinct groups: Packard Bell will concentrate on the home and SoHo market, NEC on the small to medium enterprise sector, and Zenith on the corporate market.
'Our research has shown that 80 per cent of Zenith's revenues come from the corporate sector,' Marriot says.
Bull will be managing the sales process centrally with reseller account managers, a distribution account manager, pre-sales and post-sales technical support teams and systems integration specialists.
The return to centralised computing - if it comes about - could spell a revival in the fortune of mainframe companies. The likes of Bull, IBM and Unisys, which have seen their mainframe sales wither in the face of the onslaught of PC networks and mid-range client/ server machines, may find their markets undergoing a revival.
The argument for the network computer (NC) or thin client machine, as opposed to the PC or fat client, has been extensively debated. Some observers, like Robin Bloor, chairman and chief executive of Bloor Research, believe the corporate market will welcome the NC as an alternative to the anarchy and spiralling costs of networked PCs.
Other analysts are less convinced. In the US, the Gartner Group believes the systems will be sold alongside the PC and that sales of the thin client will achieve a penetration of only five per cent to 10 per cent.
A Bloor Research report, The Enterprise by Other Means: An Analysis of the Return to Centralised Computing and its Consequences, says the mainframe companies are in a strong position to take advantage of the trend toward thin client computing. Arguing that by virtue of their existing installed base, firms like Bull are in a prime position to take advantage of the return to centralised computing, the report also carries a warning for these suppliers.
'Some of these vendors, particularly Hewlett Packard and Compaq, are well positioned to adapt because of market momentum, assuming that they catch the market before it catches them. Others are well positioned by virtue of their installed base. For these vendors the imperative is a Darwinian one: adapt or die,' the report cautions.
Bull is concentrating its activities on NT and Unix, but it is also attempting to instill mainframe-style systems management and security on to high-end Unix platforms. One of the major weaknesses of Unix and NT, according to some observers, is that they do not contain the systems management capabilities of the mainframe environment.
Earlier this month, Bull announced its high-end server software Sagiware, which is intended to give Unix platforms greater mainframe-like capabilities.
Sagiware, which comes bundled with SAP R/3 and Oracle, is designed to save users time and energy in setting up and running the system.
There is little doubt that Bull has turned the corner in terms of financial success, but it still has a long way to go before it can begin to penetrate the commercial sector it covets. By using its strength in the public sector to solidify its position over the past five years, the company has assured itself of a future. Turning over to a systems integration and software organisation also aided it in its bid to penetrate the corporate market.
But there are still many gaps to be filled.
Not the least of these is the shifting away of the sales emphasis from the direct to the indirect channel. Bull is a long way behind its competitors in this field. ICL, Digital and most other hardware suppliers now have at least 50 per cent of their products going through resellers. Some are moving toward a 60:40 or 70:30 indirect to direct ratio.
If Bull is to compete effectively, it must aim for a much higher percentage of indirect sales. Its resellers currently fall between traditional Vars and systems integrators. Although many have traditionally concentrated on the public sector, others have vertical market products in other fields.
Bull's mainframes are still sold direct rather than through the channel, but it may be that Bull has to reconsider that option. There are rumours that IBM will be selling its latest low-end mainframe, the Multiprise 2000, through the channel. Although the rumours are unconfirmed, IBM has acknowledged that it is looking at alternatives to direct selling and in Germany such a system already operates.
In the five years since it hit financially troubled waters, Bull has undergone a massive reorganisation. By turning itself into a systems integration company, bringing its Unix and mainframe divisions under one central management team and hiving off its PC division to Packard Bell/NEC, the company has pulled itself back from the brink. The decision to act as the European distributor for the PC business also ensures that it has a presence in the market which will satisfy its own installed base of customers and the resellers.
But the road ahead will prove hard going. While Bull was rescuing itself from the possibility of failure its competitors were building up their third-party channels. Bull's task now is to play a game of catch-up and to build itself a channel comparable to those of Digital, HP and ICL.
The task will not be an easy one.
Today saw 14 of the UK IT channel's biggest hitters come together to determine the winners of CRN's WiC awards. But what does being a WiC judge actually involve? Doug Woodburn reports
'Smaller firms may struggle to keep up with Microsoft's innovation with Dynamics' says CEO Stuart Fenton after acquiring assets from Profile Enterprise Solutions
Pete Peterson admits the firm hasn't always been the 'easiest company to do business with'
New chief exec Aaron Painter says 'longer-term strategy' could see firm tackle the Asian market