PC Dealer Roundtable ? Network Computers: Platform Views

As part of our regular PC Dealer roundtable series, we brought together 10 industry figures from firms involved in network computing to discuss the way forward for the technology. Simon Meredith reports on the debate

Everyone has been talking about network computing, but how will resellers benefit from this new technological era? Will it present them with opportunities or will the wrangling between the NC and the Net PC simply mean lower prices and lower margins at the end of it all? PC Dealer assembled a group of representatives from resellers, distributors and vendors to discuss the issue and put forward their points of view.

The participants and their positions on the subject...

Sam Sethi, Northern Europe product PR manager, Netscape Communications: ?Netscape is a cross-platform company. From our point of view the NC or the PC is not an issue. It?s horses for courses and you choose the platform that meets your requirements and cost of ownership.?

Pat Dunne, Northern Europe general manager, Neoware Systems. Neoware was formerly know as HCS Network Systems and claims to have shipped the world?s first network computer in June 1996: ?Resellers are already embracing this technology. Three of the top five PC resellers in the UK resell our products already, so it?s actually happening and there is reasonable margin and money to be made in this market. They can focus more of their energies on the profitable infrastructure and server side of the business and therefore it?s a very good business for resellers to be in.?

James Griffiths, commercial desktops senior product manager at Compaq: ?We?re obviously behind the Net PC initiative. Our main emphasis is around cost of ownership which is a major customer concern, and in helping the reseller to address that concern most profitably.?

Kevin Vaughan-Smith, corporate sales director, Psion UK: ?Our interest in the NC is the extension of that model into the mobile network computer and to ensure that integration between in-field devices ? the kind that executives, managers and blue-collar workers want to carry ? and the network is as strong as it currently is with the PC. So we do support both camps and we are interested in seeing which way the market takes us.?

Yuri Pasea, director, Kerridge Network Systems: ?Primarily we are Citrix? largest reseller in the world, but we set out to deploy applications across any platform including Psion, Compaq, PCs, NCs ? that?s what we?re aiming to do.?

Mike Altendorf, OS Integration: ?We?re a consultancy services organisation working with the total cost of ownership studies from Microsoft and Gartner, and with different variances between corporates. We do a lot of integration of Novell, Microsoft and Oracle environments, and client/server-enabling of applications for people. The key thing we are looking at the moment is total cost of ownership and the whole area of using the intranet/internet technologies to enable host applications, both current and legacy.?

Jeremy Gittins, Windows marketing manager, Microsoft: ?This year we are focusing on our broadening client platforms, particularly down into the thinner area ? the Net PC and the Windows terminal. Of course, that brings in the whole issue of total cost of ownership and that?s my main focus.?

Kevin Mannion, sales director, Novell UK: ?The promise of network computing is all about freedom of choice and that, fortunately, means you?ve got to get the infrastructure right and that really is where the magic is ? it?s not about what?s on the desktop.?

Andrew Bailey, UK product marketing manager, Oracle Corporation UK: ?I think most people know what Oracle?s position is in this market. If you think about what Oracle?s core competence is, it has, for a number of years, been an infrastructure supplier, particularly information management infrastructure. But, more latterly, it?s been much broader than that. To my mind most organisations accept that the way forward is network computing as opposed to specifically network computers.?

Eric Roth, market information services manager, Tplc: ?I guess we typify the reseller community in the UK. What we want out of network computing is a business opportunity for us. But we?d also like a very business-like offering to give to our customers. They all know about NCs, they all know about Net PCs, but we are finding it quite hard at the moment to make a business proposition that says, ?here?s what you buy, here?s what you do? which the customer can feel comfortable with.

?Every time we start this conversation we start talking about total cost of ownership (TCO) and I think, quite frankly, some of our customers are now getting TCO-fatigue. Every product they get offered seems to be solving the TCO problem. When they buy PCs and servers, as they?ve done for the past 15 years, they are very clear what they are asking for and what we?re supplying them with; we?re now trying to help them say ?should we look at Net PCs?? ? and because they are only looking not buying ? ?should we look at NCs??

?I hope to learn something from other people about how we can make a better business proposition to them.?

Those were the opening comments, and Roth?s statement really set the scene. For resellers, this is the moot point: how do we put a tenable business proposition to customers and, beyond that, how can we make money out of network computing?

Part of the problem for users, Roth added, is the different messages being put out by vendors: ?Because we are a multi-vendor reseller we get all those messages too and I?m sure that our salesforce is telling different stories week to week because of who they spoke to last.?

Tplc does not have a set policy on this issue. ?There is no single solution or formula. It is not that clear. Most of our customers seem to look at it as an experimental area at the moment. Most of the people we talk to have never seen them, never touched them, and they don?t understand what they are going to get.?

Kerridge Network Systems (KNS) has adopted a line with its customers through adopting the Citrix product. Pasea said that from a standing start 18 months ago, more than 80 per cent of KNS? business is now Citrix and network computing related. ?A lot of companies are very comfortable with using that technique. They?ve got a lot of legacy applications which they want to keep and migrate into this new network computer world and they are all thinking about the future. We?re giving the customer the freedom to choose which direction they can take in the future.?

KNS is giving users Citrix as a way of maintaining their position before they decide if or how they should change their IT infrastructures. It?s probably fair to say that KNS is regarded as an expert in this field but it has not been difficult to get to this position, said Pasea.

?Probably because we decided two years ago to focus on the whole network computing issue ? before people were talking about it. Today we have a lot of expertise there and we can offer everything from Java to Unix, to NT ? you name it, even down to 3270 and 5250. What we are now doing is promoting all this technology through the channel and to the user.?

But few businesses are as advanced as this; few resellers have formulated their network computing strategy as yet.

Sethi thinks we need to take a step backwards. ?We all pretty much agree, even Microsoft, that the model is really server-based and that it is going to move away from people configuring their own PCs and their own desktops. Whether it?s a PC or an NC, it will be a Web-tome or an intranet-tome that you plug into.

?If we accept that that is where it is going, what is stopping us getting there today? I think the confusion is in the ?fat-client thin-client, come to us, we do everything? approach. It doesn?t help the customer because they don?t know which side of the fence to go. What is it that we are trying to put in place now to overcome the user?s fear and the reseller?s confusion??

Part of the confusion, says Compaq?s Griffiths, has been caused by the claims made in the name of the NC. ?Only part of the story has been addressed. Coming up with this concept which requires companies to throw out everything they have got and, from the reseller point of view, to go away from all the skills and expertise that they have currently, to try to get to grips with a new technology and a new way of doing things, is not realistic. They are not going to go there in one step.?

But Griffiths does not believe that customers are tired of talking about cost. ?We?ve been working very hard with our partners to address TCO with the traditional PCs platform. The Net PC is just an extension of what we?ve been doing in that arena ? in making products more manageable and allowing people to deploy and use new internet/intranet technologies while still using the same base platforms that they have already invested in.?

So there is no need for a change, according to the Net PC camp, and resellers don?t need to learn new tricks. Yet Neoware claims that three of the top five resellers, including Computacenter, are selling its products with gusto.

?They have been very active in reacting to their customers? demands to understand NCs and the technology that goes with them. Obviously a lot of customers are trialling and piloting, but we are talking about companies that, potentially, have thousands of units to roll out. The likes of Computacenter would not be adapting this technology if there weren?t thousands of units going out there,? said Dunne.

Even though it has previously questioned the wisdom of the NC concept, Computacenter has every right to follow the customer?s lead, said Roth. It is doing a good job if it is responding to user curiosity. ?No reseller is going to close the door on a technology. All the big resellers will supply what the customers want,? he added.

OSI?s Altendorf said that users are fed up with TCO, but then again OSI has never had as many TCO projects in a six-month period as it has in the past half-year. ?What we are finding is that more and more corporates that are willing to move to any sort of new architecture, whether that is a 32-bit desktop from Microsoft or intranet-enabling application, are receiving very large amounts of cash from the board, but they have to justify it a lot harder than ever before.?

OSI finds itself starting a lot of TCO models for companies at the moment. Altendorf said there is ?massive confusion? among corporates, but that little information is forthcoming from resellers and, not knowing what else to do, many companies are looking at where the desktop is taking them in the future and how they can reduce their total cost of ownership. They are also trying to look at where, for example if they use Oracle, network computing can be used within the future IT framework.

This often results in a re-examination of the infrastructure, and that creates hardware equipment business for resellers, said Altendorf. There is, he added, a definite desire to explore the potential of Web-based applications and to take existing and new applications and make them work together.

?For the reseller, the real opportunity lies in adding the real value by starting to talk to customers about their infrastructure, and how they are going to accommodate these technologies,? said Novell?s Mannion.

?We also ask the customer if they want to be tied to the Wintel architecture. Microsoft and Intel created this fat monster on the desktop and it?s in their interests to keep it there. Where the value-added reseller can make money is to give advice to their client about the infrastructure and about planning for the future.?

Altendorf responded by saying that there are a lot of resellers right now that are making a lot of money out of migrating users to 32-bit desktops and providing simple integration services. The market may not yet be ready for the NC question and resellers may not need to address it yet.

But what resellers are really looking for, said Mannion, is a differentiator, and network computing gives them an opportunity in this respect.

?Every reseller I?ve ever spoken to is looking to add value with services ? some talk about it, some really want to do it ? but most of the ones that are used to box-shifting know that they need to do it to continue box-shifting, so they are adding value by talking about the future ? putting the right infrastructures in place ? because customers are confused about network computing.?

Dunne agreed with this point and took it further. ?Network computing is not about network computers at all. Once you?ve deployed network computing then you have a choice if you want to use network computers.? But the real argument, he continued, is about where the application resides. ?They are bored with the desktop debate. They want to get to the point where they can access applications anywhere on the network, from any desktop device.?

This is the point which brings the NC camp?s attack on Microsoft heart to the surface. The argument being that if any desktop device can access any application then Windows is not a pre-requisite. ?The beauty of that from the reseller?s perspective is that the area we?ve been spending so much time, energy and money on in the past ? managing and controlling the desktop ? all gets resolved. You have a very simple client on the desktop and everybody puts their energies into the servers and the infrastructure. There is a lot more money to be made there by the resellers and by the market in general.?

Griffiths responded on behalf of the Net PC supporters. ?There is more value for the resellers and vendors if you go down the NC route, yes you?ve got the light client, but the size of the infrastructure you need to support is much larger. Also the server costs of the vendors that are pushing are far more than you would get on an NT/ Intel platform or PC server.?

It is, he added, about giving customers the choice ? a view that was echoed by Gittins ? and not compelling them to take a giant leap to get to the future right away. But this was immediately picked up by Dunne; the NC does not mean taking a giant leap, he insisted. ?Our NC can connect you to any Windows applications, any mainframe application, Netscape, anything ? so it?s not a giant leap. This desktop can look identical to the PC desktop they had yesterday if you want it to, it?s just cheaper to run.?

?If I were a reseller,? said Gittins, ?I?d start where the customer wants to start, and that would be to build on your current infrastructure. The IT guy has put his money behind the PC, Windows and Windows applications. It?s clear that the customer wants to move on, he knows that the Windows platform is now a broader range of devices and he wants deploy an infrastructure that?s going to give him business advantage.

?OK, you pull in the TCO consultancy and all of those things, but as a reseller, I would want to build on my skills and the skills the customer has, and build on what there is already, not just replace it with something that does the same or less.?

The initiative may have to come from the NC vendors if resellers are going to be equipped to offer users anything other than a stick-to-Microsoft option. Some of them are trying; Netscape, Sethi told us, has worked with a small reseller called PPIS to develop a plug- and-play internet service that puts everything in a box and enables the user, with the reseller?s help, to set up a full intranet service within about eight hours.

The service costs about $4,000 and, Sethi claimed, it enables the reseller to provide a solution very quickly while meeting the demands and needs of the market. This also leaves room to add value with applications and services.

Neoware is training resellers on how to integrate them with existing systems and, via distributor Compass, they have put together a framework for network computing seminars.

KNS deals mainly with smaller dealers, and it too trains resellers and offers network-centric courses to users though the reseller partners. But Pasea does not think resellers need many new skills to address this market because most of the skills are applications-related. ?What changes if the application is on the desktop or in the centre? That expertise is still there,? he said.

He also feels that the move to the NC or the Net PC will be gradual and will give resellers the opportunity to learn about the new technology. ?The majority of customers that are taking this network-centric, network PC scenario, are not ripping out their PCs ? PCs can be NCs ? when the PCs give up they replace them with NCs,? he said.

But, said Bailey, ?they can only do that when they start to put in an infrastructure that allows them to ? that?s the interest that many of us around the table are seeing. I know it sounds big and complicated, but you are the guys who can actually add value to that and actually start to implement these things. That?s the point of an infrastructural approach in network computing, it allows you to coexist and slowly transition and move away from what is effectively a rip and replace every year or so.?

Oracle, for its part, is running training and marketing support programmes for its resellers to try to get them selling network computing. Bailey thinks there is a kind of transition going on in the reseller community at the moment. ?I think gone, or going, are the days when there can be a reliance on simply the margin, and I think convincing their customers of the real value-add that they are going to bring to the party is going to become more and more important.

?Having said that, there is also a space for just the margin business today. Because of the TCO, the market has almost stagnated. But if we can get the costs down, which network computing promises to do, then that market will expand again, and if that market expands there?s a margin opportunity even for the resellers that just want to remain in that game. But, more and more now I think resellers are going to have to really differentiate themselves ? tell the world what value-add they give over and above another reseller.?

Mannion had a suggestion for resellers. ?They could start to raise the issue with the customer of where they want to be in four or five years? time. Well, they probably want to see their costs go down and they?ll want to see their business grow, so what does that mean to us now?

?It might mean that you look at the way you choose your suppliers ? for the customer. It might mean asking if they network computing compatible. Do they support the network computing model and the freedom of choice? There are things you can do in terms of advising customers. Its about getting into that groove now.?