Knockout margins

Customers are becoming notoriously prudent over their IT purchases, but if manufacturers are to be listened to there are still pieces of ‘killer' hardware that will force end-users in this market to open their wallets. We asked leading vendors in the region to scour their portfolios and identify a ‘recession-proof' product that will help resellers beat the downturn

Tags: Acer Computer Middle EastEMC CorporationHP Middle EastIBM Middle EastSun Microsystems IncorporationUnited Arab Emirates
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Knockout margins Havier Haddad, Channel Sales Manager Gulf & Levant.
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By  Julian Pletts Published  June 13, 2009 Channel Middle East Logo

There has been a great deal of doom and gloom of late. Voices that previously relished the recounting of sturdy quarters and double-digit growth have been silenced, muted by concerns that end-user customers are postponing IT projects and generally cutting back on their technology purchases.

Resellers are having to fight tooth and nail to secure the shrinking number of clients out there, and deliver more for that customer's buck when they do. If there are to be any concrete foundations for recovery, and for that matter, if the reseller channel is to sustain business through the predictably worrying summer months to the perhaps more vibrant last third of the year, they are going to have to think very carefully about product selection.

Hopes can only be pinned on products that guarantee the generation of demand and extra revenue-gathering opportunities. At the same time, the channel needs to focus on products that contribute solid margins that actually help deliver a healthy bottom line.

To be blunt about it, it is vitally important that resellers make manufacturers spell out exactly why they and their products are worth selling. And that is exactly what we have done here by gathering some of the region's leading systems and infrastructure vendors and asking them to conclusively outline the recession-proof products that will tempt even the most cautious customers to get spending again.

EMC Celerra unified Storage platform

EMC Celerra Unified Storage is a dedicated network server optimised for file and block access, delivering high-end features in a scalable, easy-to-use package.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
EMC unified storage solutions offer both the cost savings of consolidation, along with the industry's most comprehensive set of built-in features to drive measurable efficiencies across the business. With it they reduce capacity up to 50% using de-duplication with compression to eliminate redundant data, store data and deliver up to a nine fold performance improvement with enterprise flash drive technology and more cost-effective storage. They will also use 32% less energy per terabyte due to its low power SATA II disk drive technology and gain robust management tools for VMware environments including the only solution on the market today to deliver end-to-end disaster recovery at the push of a button.

The new Celerra hardware and software innovations that will help businesses drive down costs while giving the channel partner the opportunity to offer their customers the solution that meets their exact needs from size and budget perspective without compromising on scalability for future growth.

What kind of margins does the product offer the channel?
Our aim is to have EMC channel partners enabled to implement and support our solutions. This way, EMC partners will achieve high margins from consultancy, implementation and after-sales support. EMC channel partners gain progressive rewards as increased revenue through value-based pricing, performance rebates and co-op or marketing funds.

What skills do VARs need?
Celerra Unified storage is an easy to sell solution. Minimum storage knowledge is required to sell the solution.

IBM BladeCentre S
The IBM BladeCentre S is the entry-level integrated chassis, which means it is storage and service integrated, as well as having integrated networking and switching capabilities. The product sells for between US$4,000 and $15,000.

Who is the target end-user?
Historically, we sell this product primarily into SMB customers and distributed enterprises, but it doesn't have to be limited to that. We found non-traditional data-centre customers are receptive to it, like schools or hospitals, that don't typically have the same infrastructure as a large account. Because it is, let's say, an office in a box, they don't need all the AC or cooling - you can roll it into an office and all you need to do is plug it into the wall.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
The skills required to install this solution are no different than a normal SAN-type solution you would put into a customer. Technical expertise is not normally required at the same level. It is an easy to set up and integrated solution that is primarily driven through a wizard installation process. You don't need to be a storage expert and the trick for the channel is you don't need highly qualified people to do this work.

The other benefit for the channel is reducing the cost to the end-user. As a completely integrated solution, there are no cables, external storage or external switching. Everything is integrated into one box. If you are comparing this to a traditional rack environment then you could easily see 25% to 35% cost savings. Lastly, it's a box that opens up a new customer base for the channel; the non-traditional customer.

The solution is also perfect for customers that are looking to optimise the structure that they are buying, whether it is VMware or Microsoft, you can really optimise the infrastructure that you are buying. You have an optimised hardware in the BladeCentre S and then you can optimise the application and operating system layers that you put onto it as well.

Acer Aspire One 751 Netbook

The Acer Aspire One 751 is a new netbook which features an 11.6-inch screen format and offers users up to seven hours' battery life.

What type of customers is this product aimed at?
Being always-connected anywhere represents a diffused trend in end-user habits. Younger generations seek a tool to communicate with instant messaging or to remain connected to social networks. Professionals want a device that unites connectivity with mobility, a second device to allow them to enjoy multimedia contents, net or e-mail in every instant.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
The netbook is still a growing segment of the PC market. It is expected to remain very robust in these times. This product offers the channel an opportunity to address both first-time buyers and customers looking for a feature-filled, on-the-go communication device.

APC Infrastrxure

APC by Schneider has both products and solutions that can reduce costs of using IT at home and running IT equipment at the office. APC InfraStruXure is the firm's comprehensive data centre solution.

Why is this type of product suitable for the channel to focus on?
InfraStruXure gives the channel unprecedented opportunity to provide customers with an integrated power, cooling and management solution that will maximise space used in a data centre, offer modular scalability so you only pay for what you use, dedicated in-row and heat-containment systems that improve cooling and thermal predictability. In short, it earns you money through elimination of waste.

Are there any services that the channel can wrap around it?
Yes, they differ depending on the type of installation and management of the solution - local or remote. Services are performed by APC Service Partners. It is important to ensure the right start-up and commissioning of our units at end-user level and this can be done by trained staff.

HP Colour Laserjet cm3530mfp
A 30PPM multi-functional colour laser printer, scanner, copier with full networking, send-to-email and a built-in hard disk for document storage, priced at US$3,099.

What type of customers is this product aimed at?
Mid-sized and large companies with an IT infrastructure.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
It is aimed at people looking for simplicity and convenience in mono and colour on all office document management functions, for whom the A4 printing format is enough, and who face office space constraints. It is also a convenient product for agencies and satellite offices connected to an enterprise network.

What kind of margins does it offer the channel?
HP resellers can expect to make 8% to 15% on this class of products.

Sun Unified Storage 7000 series

Sun Microsystems claims the Unified Storage 7000 is a ground-breaking new way of storing data. It utilises OS software and is a NAS product with SSD and high capacity hard drives. Prices start from US$10,000.

Who is the target end-user?
It is aimed at anyone who requires NAS today and going forward it is also going to transfer itself to a SAN. It is really for anybody that has run out of storage on their current environment and wants to add new storage on the network and upload some of the storage onto a NAS device.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
The inherent design of it makes it the most cost-effective way of adding storage to a customer's environment today. IDC is agreeing, along with everyone else, that in a recession people are still sending e-mails, still conducting bank transactions, still making phone calls and still eating. The food manufacturers are still working and the banks are still open.

So what does a customer do when their existing storage fills up? Do they go back and buy closed storage from an existing vendor? Or do they look for something different and cheaper? This is where we fit in. We are saying to every partner, "go and talk to your customer because at some point they will run out of storage." The world is still turning and storage is still being consumed at a rate of about 40%.

What kind of margin does this product offer the channel?
We have a channel programme in place where we are going to give the channel probably one of the biggest margins in storage we have ever given them. We are talking 20% guaranteed margin. We are giving the channel all of the provisional services revenue around it, which is typically between 25% and 35% of the value of the product. It is very simple to install and channel partners can even download the dewey and have a look at it without buying.

Fujitsu primergy server range

Primergy is Fujitsu's range of towers, racks and blade architecture-based servers. It hosts all enterprise applications which require highly available infrastructure. Prices range between US$500 and US$100,000.

Why is this type of product suitable for the Middle East channel to focus on during the current climate?
The Primergy range allows resellers to earn additional profits by moving up the value chain. It ensures they become a trusted advisor which, in turn, gives them better access to other IT business from the same customer. If they're present in a customer's data centre business they have a greater say over the shape of that customer's IT. Our servers are setting higher benchmarks, which means resellers can go back to clients and show that they can collapse their infrastructure into something occupying a smaller space, but with better performance. It also provides increased ease of operation.

What kind of margins does the product offer the channel?
If a channel partner is selling a server simply as a box, they will barely make it into double-digit margins. The moment they bring value they move up into the double-digits. They can do that by either solving a customer's problem or adding value to customer's infrastructure by doing things such as bundling services, adding storage and doing OS and application implementations.

Demonstrating various solutions to the customer can add value to their infrastructure. This has been done inconsistently. We have had successes in some geographies and not much in others. Those doing it are reaping the rewards. Within the GCC we see a lot of scope for improvement in Saudi and Qatar even though we are growing well there.

What sales skills do VARs need to maximise margins on this product?
Resellers need basic pre-sales and sales skills to sell Primergy servers.
There is a non-certified course available as well as a certified course for channel partners that want to take it.

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