Intranet Opportunities: Wise Guise
Specialist distributors are recognising the potential of the intranet market and are looking to the channel to help them in this ever-expanding market. Bobby Pickering reports
The growing demand for Web development and intranet products is breathing new life and energy into specialist distribution channels, as the movement towards open standards-based Web sites and intranets marches on. Old friends ? and, possibly, some old foes ? of PC Lan and Unix resellers are re-emerging under new guises, all spruced up to bravely face the new tomorrow.
Now operating from offices behind the White Hart pub in Newmarket, a revamped and reformed Unipalm has vowed to shake off its former direct sales operation and go 100 per cent indirect. Datatec has set up an impressive operation in former US Robotics offices in Winnersh, stitching together Volante, Data Guardian and Inform Training into a well-focused operation. And the pan-European Persona-Toplog empire is being transformed into a new entity that will reflect a growing range in its intranet portfolio.
These aren?t the only specialist distributors to have seen a new market-making opportunity that could eventually propel them into the big league, alongside the likes of Azlan and Ingram Micro. Those two pan-European operators are currently positioning themselves to take advantage of a single currency, when it eventually comes. And they?re both keen to be seen as intranet distribution powerhouses.
Among the other distributors that are expected to make big waves in the emerging intranet/internet market are Datrontech, which recently bought Data Connectivity; ETC, which recently acquired Data Translation; Kerridge; and Access, with its particular focus on the Silicon Graphics market. Although, says one disgruntled contender: ?The market is such a bandwagon now, I?d be surprised if any distributor was prepared to say it wanted nothing to do with it.?
Selling high-end Netscape products like Suitespot servers, Livewire tools and Communicator clients is widely regarded as the key to this emerging market, and four UK distributors ? Datatec, Unipalm, Access and Azlan ? managed to secure deals in a recent shake-out. Several of these distributors said they expect to see Ingram Micro, which currently sells Netscape Navigator, eventually appointed to this group, as its US operation carries the range.
Unipalm and Datatec have both undergone dramatic transformations. Since a $4.5 million buyout from Uunet last November, Unipalm has been reassuring the dealer channel that it has given up all its direct sales business and transferred those sales into the channel.
?Unipalm used to be a Vad, and that meant some of its sales were direct,? says Unipalm MD Mark Norman. ?Obviously, some Vars and dealers had a problem with that, but we are now 100 per cent committed to the chan-nel for sales of our software. We are transferring all that former direct sales business into the channel.?
Unlike Azlan and Datatec, which also sell hardware, Unipalm is sticking with a software-only policy, partly because it has ambitions to be the first European reseller to eventually offer product directly over the internet. It has subcontracted the development of its Web site to Winchester-based First Option, which specialises in multimedia database work. But the company is playing its cards very close to its chest with regard to a timescale for completion of such a system.
Meanwhile, Unipalm now claims the mantle of Netscape?s number one distributor in Europe ? 30 per cent of its revenue comes from Netscape. Its other franchises include Netmanage, FTP Software and Intergraph, plus Web utilities in the real audio and video lines.
?Our aim is to form stronger relationships with a core group of main accounts, offering training and so on,? says Norman. ?The key is open standards: we want people to see us as having specialist expertise in TCP/IP- based intranets.?
The company recognises that value-adding activities, particularly training and consultancy, offer a lot of potential for profitable growth. ?The whole key to Netscape?s strategy is training,? says Norman, ?both for the resellers and users. The message to the market is that open standards intranets involve a high speed of deployment and a high return of investment. There?s also a lot of potential for consultancy through the channel, from doing network audits to implementing groupware applications.?
Datatec group MD John Chapman says the Netscape deal is important because of its pulling power. ?Netscape is an enabler for us. Once users have put up a Web site or want to put in an intranet, there?s going to be demand for a whole range of things ? router, firewalls, security software ? all the things that go with that.?
But while Chapman sees Netscape as one of the foundation stones on which to build the business, he sees drawbacks in relying too heavily on it alone. With Netscape, resellers ? and, by implication, distributors ? must watch out for an extended sales cycle, he warns.
?A Netscape server solution can be a much longer sales process ? maybe up to six months. You?ve got to get software developers committed, get reference sites in place, it?s a much longer period to sale. Intranet solutions won?t have the immediate growth they had in other areas like networking.?
That?s why he thinks other products will take off faster over the next year. ?Citrix is a great example,? he says. ?Corporates are now looking seriously at Winframe, effectively to use it to make their first step into thin client technology. They recognise it?ll be some time before they move across to the new thin clients, but in the interim they?ve got this software that can make use of their existing 386 and 486 machines. They buy a few Pentium NT servers and stick Citrix on their machines, and they?ve got multi-user Windows applications.?
Chapman is also wildly enthused by Wyse?s Winterm running Citrix, which Datatec plans to make a core product this year and strongly promote through the channel.
So a Netscape distribution deal is a good basis for an intranet distributor to get going with ? well, you?d expect the four Netscape distributors to play it that way. Other competitors, naturally, beg to differ.
Persona head of marketing Paul Mainwaring argues that having all three key platforms will be more productive. ?We offer the main three product sets ? Novell Intranetware, Microsoft NT and SCO Unix ? on which intranets are being developed, and SCO Unix includes Netscape Navigator Gold. A successful intranet doesn?t involve a single company?s software. It needs to be a complete solution of hardware, software and applications.?
Mainwaring says the new Persona group intends to be an intranet/internet market player. ?It?s the biggest market about to hit the UK channel, there?s going to be a lot of business.?
But he warns that UK resellers seem to be backing off from it. ?They realise they have to sell hard, and not just a product, but a whole solution again. Salesmen tend to take the easiest route, and things are moving again towards the full solution sale.?
A distributor with a full solution to a corporate problem is therefore a necessary partner to a reseller taking on this highly volatile new market. Chapman echoes that viewpoint when he says that today?s new breed of intranet distributors are able to give resellers guidance and advice in the emerging market.
?Resellers can have problems getting to understand how the technology is moving and where it all fits in. After all, they?re busy selling things, keeping the business going, and it?s difficult to find time to think about the future. We?re the ones who need to stick our heads over the parapet, to help them see the future ? and, most importantly, without them needing to take risks. We?re the ones who need to make sure they?re moving in the right direction, and that everything fits together.?
Norman agrees that the expertise offered by specialist distributors is essential for resellers in an emerging market. ?It?s what separates us from the big broadbase distributors, which mainly operate as fulfilment mechanisms. Their telesales teams are fine at selling what the dealer asks for, but with a lot of intranet products we?re still at the stage where the dealer needs a lot of assistance before actually buying.?
Chapman believes that Datatec?s ?roll up your sleeves and get stuck in? technical attitude offers resellers the kind of support and backup they?d never get from a primarily sales-based organisation. ?If you?re a reseller out on site installing some complex product and you ring up a big Vad for help, you?re more likely to become an expert on Vivaldi before they answer, and even then they?ll probably start going through the manual with you. We get these things up and running and we get them to work. A lot of what we know isn?t in the manual.?
Datatec offers its installation services for dealers to resell, and also as a way for training up reseller staff who are new to a given supplier?s profits. ?We suggest resellers use our guys when they?re doing a first installation, otherwise they could end up losing the profit on the job. We?ll preconfigure it, and come in with you on it, so that you?ll be more confident and better prepared for the next one,? says Chapman.
Naturally, the big broadbase distributors don?t take too kindly to this ?small is beautiful? propaganda. ?I?m fed up with that old chestnut,? declares Ingram Micro?s Nigel Judd. ?We have an emerging products division that focuses on new reseller opportunities and gives tremendous support to all these new technologies. Just because we have a highly efficient sales model doesn?t mean to say we?re not in touch with what dealers need.?
There?s likely to be a lot more verbal scrabbling for position in this market over coming months, for the simple reason that resellers are starting to get the message that the intranet and internet markets are precisely where business customers want to move their money and their energies.
?Everybody recognises that the service industry around intranets will dramatically expand over the next few years,? says Mainwaring.
?There?s maintenance on Web sites, application development for the intranet, consultancy, installation ? a whole host of value-adding opportunities. What resellers need to be aware of is that this market requires more investment in technical support, and not just a sales force to move into. But that?s where specialist distributors like us can help ? in that transition period. We can provide the support back-up for them right now.?
So just what is the winning formula for the intranet distribution market? Education, education and education, is Unipalm?s unhesitating response. ?We need to educate resellers about the market and the products,? says Norman. ?We?ve got the Netscape accreditation programme to work on, and there is big potential in training.?
Chapman thinks that keeping the playing field open may be part of the key to success. ?Microsoft is offering just about everything you need to put together an intranet solution, but the corporates have big problems with it ? especially get-ting tied into it. Netscape runs on an open environment, and that opens doors in the big houses, which will have a mixture of all these things ? Windows, Sparcstations, Digital?s Alphas. Netscape can work in all those environments, and that is its biggest strength in the corporates.?
Traditionally, Datatec?s customer base has been resellers that have specialised in NT and Unix, and Netscape gives them all not just a means of unifying those disparate environments, but also a natural way in which to progress.
?There?s a lot of fluidity in this market at the moment,? adds Chapman. ?For instance, a lot of ISPs out there are finding they?re being asked to provide more for their clients, to set up Web sites and so forth. Their market is evolving towards intranets, and some of them will become the resellers of the future.?
In those words, many PC dealers will not just recognise the opportunity and profitability that is emerging in the intranet area, but also the threat to their existing businesses, and the distant drumming of greater competitiveness and weaker margins if they don?t start moving now.
Datatec: After the big bang
Background: The UK operation was formed in October 1996 after the ?big bang? merger of the two distributors Data Guardian and Volante and the acquisition of Inform Training. Relaunched in January this year as five divisions (systems, products, intranet solutions, training, and support) and operating out of former US Robotics offices in Winnersh.
The #100 million turnover South African distributor Datatec Group has provided the main financial backing (a 78 per cent stake), with the rest of the equity held by working directors, headed by group managing director John Chapman. Chief personnel involved include Jens Montanana, a former US Robotics director, as group executive chairman; Data Guardian founder Clive Cooper; and Volante founder Richard Jackson.
Projected 1997 turnover: #17 million
Staff: 55
Key vendors: US Robotics, Netscape, Citrix, Shiva, Telebit
Mission: To become leading intranet services company
Contact: 0118 925 6000
Old Stars, New Paint, Unipalm
Background: Originally established by the now legendary mega-millionaire Peter Dawe in 1986 as a specialist supplier of PC-Unix connectivity systems based on TCP/IP protocols. Dawe set up the internet access service Pipex on the back of Unipalm?s success and sold the whole shebang to the US internet service provider Uunet in November 1995.
Uunet sold the Unipalm name and software sales business to Newmarket-based Awarenet last November. Mark Norman, a former head of marketing at Unipalm and international marketing director at Gandalf, and Ken Bowker, former MD of Leaf Distribution, headed the successful team. Others behind the $4.5 million bid are Tim Considine and Steve Skilton.
Projected 1997 turnover: #8 million to #9 million
Staff: 26
Key vendors: Netscape, FTP Software, Intergraph
Mission: To control 25 per cent market share in UK of intranet software distribution
Contact: 01638 569 600