Meet The White-Hot Performers
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ALERT MAKES FRIENDS IN HIGH PLACES
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Robert Stewart Finds That It Pays To Have Friends In High Place.
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This company, Alert Computing, a custom-system builder in the mountainous resort community of Sedona, Ariz., grew unit sales an astounding 758.3 percent last year, making it the No. 1 White-Hot Performer among
CRN
's 50 Leading System Builders. And Stewart thinks being in Sedona had something to do with it.
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"There are a lot of people in Sedona that have a lot of money and own a third or fourth home. And they [own] businesses," said Stewart, the company's founder and CEO. "That's where most of my contacts come from."
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Well-heeled business owners with vacation homes in Sedona need
to their business data and to their employees, Stewart said. As a result, he promoted
2003 and other Microsoft products last year. "My business just took off," he said.
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It also doesn't hurt that Stewart's college roommate at West Point used to work for the Joint Chiefs of Staff, putting together military contracts for civilian companies. Now he's doing just the opposite. And the civilian companies Stewart's friend is helping to get military contracts include Raytheon, Boeing and Lockheed.
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"No matter who we were working for or where in the world we were operating, Bob Stewart was our resource—guiding our equipment and
purchases, designing and upgrading our Web site, and being a good mentor to his technology-challenged
and friend," said his West Point roommate, Tim Ringgold, now CEO of Defense Solutions, an international project management and business development company in Exton, Pa.
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Defense Solutions has worked with the U.S. Congress, NATO, the Pentagon, the Army of Iraq and the governments of Israel, Hungary and Romania. It has offices in Pennsylvania; Miami; Budapest, Hungary; Tel Aviv, Israel; and Bogota, Colombia.
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"What is most remarkable to me about our work together during this period was the thoroughness and promptness of his customer service," Ringgold said. "I knew that if I called Bob, he would find a way to work through our problem and get us to a solution—promptly and inexpensively."
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Other Alert Computing customers agree that the quality customer service they get sets the custom-system builder apart from its name-brand competitors. "To be able to call Alert Computing in the morning and have [Stewart] in our office before noon is most unusual in the industry and most important to us," said Merenna Morrow, owner of Rader & Morrow Health Concepts, Sedona.
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"It is also important to our staff to be able to call on the telephone and find a happy person on the other end of the line," Morrow added. "Stewart does not sell us unnecessary products, and we far prefer his custom-built systems to anything we can find at major-brand
companies.
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James Breen, owner of ClickerAds.com, Sedona, said he also gets better customer service from Alert Computing than from the branded vendors. "Why do we choose him over Dell, HP, etc.? It comes down to service. When we call Alert Computing, we actually get a human voice, and if we happen to get the answering machine, our call is returned within the hour. There is no charge for phone support, ever, which is more than I can say for the major vendors," Breen said.
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Stewart said his two-pronged strategy of selling to defense contractors and small businesses, coupled with superior service, is what's driving Alert Computing's growth. "About half of my systems are built for the military and half go to private industry," he said.
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A contract with Raytheon for 3,000 servers helped fuel his company's growth last year, Stewart said. But that wasn't the only thing that boosted sales that year, during which the solution provider sold 9,633 servers, 2,143 desktops and 1,700 notebooks.
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Stewart, who originally founded Alert Computing as a Web site development company before getting into system building, also put his Web experience to work last year. He said he tweaked his
so that it is prominently displayed on most Internet
engines.
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PRIME SYSTEMS COMBINES RESOURCES
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When the industry first began grappling with the dot-com crash, many decided it was time to leave the business. Michael Chang, who ran local distributor Directron.com in Houston, saw an opportunity to double down.
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Today, Chang is reaping the benefits of a key decision he made in the early 2000s to buy one of his customers, Prime Systems, a local custom-system builder that was going through a transition of its own.
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Prime Systems turned up as the No. 2 White-Hot Performer on this year's CRN 50 Leading System Builders list with a business model that combines an Intel-only technology strategy with a high-touch services approach, focused aggressively on school districts.
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"When Prime Systems was one of our clients, the market was flattening, the manufacturers were under pressure, and the cost structure of Prime Systems had eroded," Chang said.
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When that company's owner died, his family opted to get out of the business, and sold Prime Systems to Directron.com, which also builds systems and operates a Web storefront.
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"We acquired the company and kept it as a separate identity," Chang said. "And now, as a result, Prime Systems has the same cost structure as Directron.com."
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Directron.com, which the Houston Business Journal placed on its own list of the 50 fastest-growing companies in that city, saw a 31 percent increase in sales in 2005. The low cost structure maintained by the distributor, as well as its ability to source components, has come in handy as Prime Systems has begun to show significant growth.
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Prime Systems built some 29,110 systems last year, including about 25,000 desktops and workstations, 4,000 notebooks and 100 servers, Chang reported. The company's annual revenue hit $20 million, and Chang was able to bring Prime Systems' workforce back to about 50 employees after it had gone down to just a few after the acquisition.
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Chang said a big factor in Prime Systems' 424 percent growth in systems built last year was the inclusion of new K-12 education contracts the company won, beating out competitors such as its Texas rival, Dell. Chang said Prime Systems' ability to provide integration and services to both VARs and end-user customers has been key. So, too, has been Prime Systems' policy of offering five-year warranties—or longer—in place of the standard three-year warranties.
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"If you look at the overall package, ownership is not just the cost of the system, but the cost of maintaining the system," Chang said. "What we want to emphasize is that we offer the best total package for the customers. They have fewer headaches once they buy the system.
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"If they want a seven-year warranty, we'll give them a seven-year warranty," he added. "With that, we win a lot of competitive bidding situations."
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Prime Systems and Directron.com share the same 100,000-square-foot facility in Houston, located next door to Agama Systems, another system builder and solution provider of servers and higher-end desktops. Agama's CEO, David Chang (no relation to Michael Chang), said his company and Prime Systems frequently sell each other systems and components.
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"He's a nice guy. They're working real hard over there," David Chang said, noting Prime Systems' success in landing government and education contracts over the past year.
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Michael Chang said his company will continue to eschew some competitors' strategy of trying to offer the lowest-priced systems and instead will focus on reliability and service.
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"We put a lot of emphasis on quality control," he said. "We use Intel motherboards. That pays out in the long run. It's not the cheapest board out there, but the quality is very stable. And quality helps you grow your business."
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ENTRE SOLVES THE MEDICAL LAB MARKET
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Entre Technology Group has found a successful, growing niche for its custom systems in the medical equipment and clinical lab market, a niche that has helped make it the No. 3 White-Hot Performer among
CRN
's 50 Leading System Builders.
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Entre, Fort Worth, Texas, built 4,004 systems last year, an increase of more than 120 percent from 2004, the company reported.
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The system builder's business has come a long way since starting out in 1984 as franchise store No. 135 in the now-defunct Entre Computer Center chain. It got its start in the medical lab market 16 years ago with a contract to provide computers for a medical-testing equipment manufacturer. "As employees left that company, we would continue to work with them at their new companies," said Entre Vice President Gary Clayton.
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Entre currently supports its medical industry clients with embedded PCs, workstations that integrate with lab equipment, stand-alone systems for nurses' stations and remote printing solutions. It also continues to build custom systems for clients outside the health-care industry.
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To bolster its medical expertise, the company in 2000 acquired the assets of a bankrupt developer of laboratory software, which also had been a customer. In 2003, Entry solidified its place in the medical space with the acquisition of Responsive Terminal Systems, which has a solution for securely transmitting lab results to doctors' offices.
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But Bob Clayton, president and CEO of Entre, said the main
of his company's growth has been responsiveness to customer needs. "Everybody talks a good game about on-time responsiveness," he said. "That's what we do. We do everything consistent. We focus on the quality control of our products. It's all about making sure what the customer wants to buy is shipped to him."
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The company's responsiveness is what made it the hardware supplier of choice for Gamesystems, Fort Worth, a solution provider for Internet cafes and sweepstakes promotions, said Curtis Sheldon, sweepstakes manager. "They're very prompt," Sheldon said. "Sometimes we tell them on Monday that we need 100 to 150 systems by Thursday, and there was only one time they couldn't do it."
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Alta Healthcare Systems, which operates three medical labs that service four community hospitals in Los Angeles, does business with Entre because of its product expertise and technical support, said Irvin Henry, director of lab services at Alta.
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"We have IT people here, but they're not always available," Henry said. "In an emergency, I deal with Entre. I'm a technical person, not an IT guy. Entre sometimes walks me through issues over the phone. They are very helpful to people like me who are not IT experts."
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That kind of customer support is especially critical to the William Bee Ririe Hospital in Ely, Nev., about 250 miles from the nearest airports in either Las Vegas or Salt Lake City, said Art Phillips, lab manager. Because of the hospital's isolated location, it keeps spares on-site in case any computer systems linked to its testing equipment or nurses stations have a problem. "We replace it ourselves, and they send replacements," Phillips said.
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Entre is also known for its easy-to-use software, an important consideration for a hospital with frequent employee turnover, Phillips said.
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"Their software is very user-friendly," he said. "We work with a number of temporary technicians that come in to work a couple months and then leave. It's easy to train them in the software."
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EASTERN DATA DOUBLES UP ON EDUCATION
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Eastern Data Inc. has learned one thing about selling to education customers: More schools equal more money. The system builder and components distributor doubled the number of systems it sold in 2005 to 6,400 units, thanks to a more targeted focus on education clients.
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"We had more trainings, more events, and we visited more schools," said Joe Chang, president of EDI, Norcross, Ga.
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Chang said last year's growth was out of
for EDI, though, which spends a lot more time trying to increase loyalty among existing customers than winning new ones, and he expects more moderate growth of 20 percent this year.
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"We are very heavy on referrals," he said. "We try not to overextend too much. We do a gradual type of growth."
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Chang tempers his 2006 forecast in part because of delays in Microsoft's Vista
and because of the growth in the notebook space, where brand-name vendors hold decidedly more market share.
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While
expects to focus more on notebooks, Chang said he needs help from component manufacturers such as ASUSTek Computer and MSI Computer to better compete against Dell and Acer. "A lot of schools talk notebooks, but if we can show them the advantage of buying from us, we have a very good chance," he said. "Right now, our price points are not there. The only thing we sell in notebooks is on the high-end side."
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EDI uses Intel motherboards because the system builder's experience with AMD has been spotty, Chang said. But he said AMD's products are improving and he would reconsider them. "It will take time for AMD to change the perception about AMD. Right now, gamers go with AMD, schools go with Intel," he said.
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Chang opened EDI in 1997 after selling another system builder, Supreme Computer, in Dallas. That company was averaging more than 1,000 systems a month, he said. Starting from scratch again in the Atlanta area was challenging, but EDI has established itself, as its growth last year in the education market indicates. "Our first two or three years, we were not as successful," he said. "It takes time to build."
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MH Data Services, a Buford, Ga.-based solution provider, sells Hewlett-Packard and Compaq workstations, but complements them with EDI's systems for some specific applications or to lower the end user's costs, said Steve Sachs, systems architect at MH Data Services.
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"Typically, we cultivate a relationship with a client. We prefer the business
from HP/Compaq, if you go that way. If you need to save that $100 or $200, let us put together a tighter, high-quality, stable box that's just like HP, with no label," Sachs said. "It's been quite a good boost to our revenue. It's a lot cheaper to have them do the initial build for me vs. me taking the time to do it myself. And the quality is there. I've had to warranty only one system, and they took care of it immediately."
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EDI counts an affordable three-year local warranty as a differentiator for its machines, and solution providers such as Sachs said that is a powerful weapon to combat Dell.
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"That grabs a customer's attention. With EDI behind it, it becomes an easy sale," Sachs said. "I've been in business 23 years. I've done a number of price comparisons with customers. The price thing is a misnomer. Every time I go through one with my customer, by the time we configure a box to make it actually useful, [the cost of a Dell] is as much as or more than HP or Acer or [EDI] boxes. If you take the customer through that exercise, it's a piece of cake to sell off of Dell."
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AMAX INVESTS IN ENGINEERING
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Amax Information Technologies placed its bets on an investment in engineering, with an emphasis on building servers,
and specialized systems, to help drive a healthy 88.5 percent growth in unit sales last year.
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Clients in the channel, though,
the Fremont, Calif.-based system builder's success as much to its relationship skills as its engineering prowess.
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"I probably do at least 70 percent of my business with them," said Hank Skawinski, CEO of Datawise PC, a Mountain View, Calif.-based integrator. "I like them a lot because they are very responsive. What I don't buy from them are the items they don't provide."
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Amax built about 34,500 systems in 2005, including some 30,000 servers and 2,000 storage units, the company disclosed in the
CRN
Leading System Builders Survey. Desktops and notebooks accounted for the remaining 2,500 units.
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Amax's server business profited as Intel and Advanced Micro Devices leapfrogged each other month by month with advances in server processors and
chips. Amax is both an Intel Premier Provider and an AMD Platinum Partner.
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"We like to position ourselves as a trustworthy manufacturing partner and solution provider to our customers," said Amax President Jean Shih. "More than that, we do have that concept that we do want to provide a quality product to our customer."
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Shih said Amax is willing to provide custom chassis, custom configuration, custom integration and hand-holding throughout deployment—and has used face-to-face and constant interaction with VARs to its advantage.
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VARs interviewed about Amax agreed. "There are quite a lot of places where we can buy products," said Sam Wong, CEO of Universal Systems, Salt Lake City. "Amax's strength is knowledge and integration. That's what makes them a little
different."
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Wong said his company focuses less on price than on technical expertise and support, and that is where Amax beats many competitors. "They might be a little bit higher than most—just a touch higher—but with the integration from their facility, we see the added value," he said.
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Amax sales hit $88.5 million in its most recent fiscal year, which closed in September, and employs 150 people. Shih said the company doubled the size of its production facility last year and will most likely have to expand again by year's end.
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But growth wasn't always easy. Shih said that in the wake of the dot-com meltdown, Amax had to increase its investment in engineering and research, even as the market was shrinking and many customers were going out of business. To make it even more challenging, the company had to forge ahead as technology moved into higher-performance systems, rack-mount servers and increasingly dense data centers.
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"We really focused on the engineering issues of the system, and then building trust with our customers," Shih said. "Gradually, we were able to penetrate a lot of vertical markets."
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In many instances, she said, that meant covering the cost of sending out evaluation units—a move that required a steep investment but paid off. "The medical VARs, when they want a computer, since their volume isn't huge, they don't go to Dell," Shih said. "They need a lot of hand-holding, getting the engineering right. We have a team that's very patient."
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Skawinski said Amax has mastered an art that many other vendors have not: good communication. "They send these excellent e-mails on their offerings," he said. "They are one page: bang, bang, bang. I love it. I can read it and say, 'I need that, I don't need that.'
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"We're in an information-overload age. I deal with a half-dozen different vendors, but Amax has evolved into being very good at communication," he said.
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Looking ahead, Shih said her company is intent on growing its storage business and forging ahead into other areas as well. Amax moved early into rack-mount servers and cube PCs for entertainment and is now looking to make a bigger mark in
SANs,
appliances and other systems.
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"The market is huge," she said. "There are so many companies to compete with. We definitely want to keep spending and keep growing."
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CHEAP GUYS ADAPTS TO THE MARKET
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Started as a hobby in a garage, Cheap Guys Computers has grown to be a booming custom-computer business with six retail locations in Florida.
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Founder and President Glen Evan Coffield began building custom systems for individual customers and eventually opened a 300-square-foot shop in a flea market. But Coffield didn't think his company's name at that time—GEC Computer Consultants—was a good name for a retail shop.
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While in the car with his business partner on their way to get a license for the shop, Coffield summed up his business philosophy: "We're a couple of cheap guys!" And a brand was born.
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Cheap Guys, Longwood, Fla., saw revenue increase to $12.5 million in 2005 from $10 million in 2004 while system sales grew nearly 73 percent to 11,100 units, earning the company a spot among the top 10 White-Hot Performers on this year's
CRN
Leading System Builders list.
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Coffield attributes his company's success to giving customers what they want and adapting to its local market. "When you walk into a big box store, you get what they were told to sell that morning whereas even though we have ready-to-go systems in our store that we build, if a customer says, 'I want XP Professional instead of [the Home Edition],' we do it," he said.
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While the business was built on custom computer systems for home users, Cheap Guys has expanded its product line to include servers, e-commerce, components and corporate systems.
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The volume and variety of product is a factor in Cheap Guys' success, said Jeff Potenza, eastern regional sales manager for Evertek Computer, Oceanside, Calif., a components distributor that sells hardware to Cheap Guys.
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"He has a lot of selection. With his group of stores and the way he distributes from his warehouse to his stores, he can always keep his stores filled with product. I think it's unique for his type of business," Potenza said. "It's probably one of the last system builders I deal with that has multiple stores."
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Dave Pacansky, owner and operator of 24hrTechSupport, an on-site service company based in Orlando, Fla., buys his components from Cheap Guys and said the customer service and competitive prices keep him coming back.
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"[Coffield] stands behind everything he sells," Pacansky said. "He's very good servicewise for his customers. I think that's the true secret to his success. He makes sure all of his employees are trained. He makes sure anything he sells he can service.
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"He's willing to take a hit in profit sometimes to make sure the customer's happy," Pacansky added. "He's earned my business more than once over."
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Expansion, said Coffield, is the key to staying afloat as margins shrink in hardware. "The margins get driven down every year, so you have to increase volume to make the same money," he said. "Every year we're expanding to remain profitable."
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In addition to hardware sales, a big revenue builder for Cheap Guys is its in-store computer repair business, and the retail chain plans to add on-site service in the future. Extended warranties on its systems have driven revenue growth as well, Coffield said.
is also in the future for Cheap Guys.
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"The hardest part in this business is that we've changed so many times. That is our advantage—being flexible and looking at what market demand is," he said. "We're not a 'we'll build it and hope they come' [business]."
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Coffield said it's his Brooklyn roots that give him the spunk to persevere in a changing business climate. "If I have to work 100 hours a week, I will," he said.
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CDVD NOW PLAYING IN HOME THEATERS
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In 2003, CDVD decided it was time to make a change, and entering the home-theater market seemed to be its ticket back to profitability.
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The custom-system solution provider, based in Sunrise, Fla., had been a systems integrator, system builder, IT consultant and software developer at various times since 1979. However, when the market began to slow during the last downturn, CDVD saw its profits decline.
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"In 2002, our financial statements showed a decreased profit for the fifth consecutive year in our traditional market," said CEO and co-founder Claude Pepin. "We were looking for a new business opportunity and a vertical market at the beginning of the business cycle. After 13 months, in 2003, we considered many options, and the home-theater market was really interesting."
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CDVD now makes the CDVD TESS (Total Entertainment and Security System) digital media server in both
and
configurations. The systems integrator focuses on home automation, security surveillance, VoIP, home
and high-definition home-theater systems. CDVD developed its own
with
and a Faroudja
chip, which can be integrated with any workstation or home-theater PC.
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The result was a 45 percent increase in revenue to $7.4 million between 2004 and 2005. The number of systems CDVD built grew 42.4 percent to 1,789 units over the same period, giving it the seventh-highest unit growth rate among
CRN
's 50 Leading System Builders.
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Stephane Theriault of Coconut Creek, Fla., purchased a TESS 64 system last year and is pleased with the product and the capabilities it brings to his home-entertainment system. He said he chose CDVD TESS for its ease of use and functionality.
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Theriault looked at competitive systems but found they weren't adaptable enough. "To do the same thing with another company you had to buy a lot of components. This was one that had everything on it, and it's flexible," he said.
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Having a broad reach across several markets has helped the company grow, Pepin said. "We can do private house, commercial and industrial projects. Many customers have more than one residence and have a business to operate. We install technology at their business, their home and secondary home," he said.
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Home integration is proving lucrative for CDVD.
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The integrator currently is wiring 1,100 units in a South Beach condominium tower, providing each unit with T3 networking and two VoIP lines. The condo complex pays $2,900 a month for the
line, and each customer will pay $20 monthly for Internet access and $20 per month for two
lines.
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CDVD invested $125,000 in the cables, and the customers have five-year contracts. Once the integrator makes up the cost of the cables, the rest is profit. CDVD is also working on condominium projects in California and Nevada.
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Pepin said the integrator has built its customer base through word-of-mouth and mailings. In addition to marketing at its condominium-project sales offices, CDVD co-markets with a network of reseller partners, giving them access to customer leads and CDVD's back-office
and accounting systems. CDVD also advertises in print, on television and on radio.
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Working in the home-theater market gives CDVD TESS an edge, according to Pepin.
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"Competing with major [vendors] like Dell, HP or Gateway is very difficult. Competition with India or Asia in the outsourcing of software development is very difficult to do. We are really successful with this new vertical market," Pepin said.
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CDVD is able to create a complete solution that gives the integrator higher margins on its systems than the average custom-system builder, and its labor costs are lower, he said. Margins in the digital-home integrator market can be higher than 50 percent, Pepin said.
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CDVD will open its second location in June in New York, and in the third quarter of 2006 expects to open six more locations in the United States, Canada, South America and Europe.
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BYTESPEED BACKS UP SYSTEMS
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The five-year warranty ByteSpeed offers with its line of custom-built systems wasn't quite enough to pry the Westbrook School Department in Maine away from the Compaq computers it was using.
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Rather, it was ByteSpeed's offer to send out a test system, with shipping paid both ways, that ultimately swayed the school district to take a closer look. "I thought the computers were well-made," said Tyler Dunphy, the district's director of technology. "And I was very impressed with the quality and the level of support available."
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The Westbrook School Department has been using ByteSpeed systems for about three years now, and Dunphy said he recently started purchasing models for the city of Westbrook as well. In addition to having the security of the five-year warranty—two more years than required in a typical government contract—Dunphy said he never has to worry about the quality of support.
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"I have an incredibly responsive single point of contact," he said. "If I went through an HP or a Dell, my contact could change weekly or monthly. But at ByteSpeed, my rep has changed once, and I received an immediate phone call and an e-mail when it happened."
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Dunphy said the custom systems cost up to $150 more than competitors, but they're worth it, particularly in Maine, where cities and schools don't typically replace systems after only three years. "That's where the five-year warranty really pays off," he said.
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Dunphy's glowing review comes as no surprise to ByteSpeed President John Tupa, who co-founded the company in 1999 with the intention of providing quality products, sales and technical support. "Our focus is customer service," he said "People still like to have their hands held. That's the bottom line."
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Tupa believes ByteSpeed, Fargo, N.D., increased its unit sales 40.4 percent to 16,110 systems last year because of its support. "We bend over backwards when a lot of folks won't," he said.
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For example, Tupa said ByteSpeed sourced gear-driven optical drives when one school complained that students were stealing the rubber belts off the standard models. The system builder also has put CD burners in the middle bay to prevent students from reaching through and stealing the
and put
numbers on the inside of the computers so they can't be peeled off.
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Tupa founded the company with CEO Charles Homme and Scott Bleth, vice president of sales, and a small group of investors. Today, ByteSpeed employs about 25 people and has 2005 revenue of $16.2 million to its credit. The company is both an Intel Premier Channel Partner and a Microsoft Platinum OEM.
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Tupa attributes ByteSpeed's success with product quality and customer service in part to the company's relationship with Intel. He said ByteSpeed uses Intel CPUs and motherboards exclusively because of the quality and support Intel offers and because it's easier for technicians to specialize in one platform.
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"We tried dabbling in products from AMD early on, but we just couldn't handle the support part," he said.
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Tupa said 95 percent of the company's business comes through sales to educational institutions. "Part of the reason is they are low risk," he said. "We know a purchase order from a school is going to get paid. Our [unpaid invoices] are very low. They might be late—our average accounts receivables are 45 days—but they always get paid."
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ByteSpeed also sells to local small businesses, particularly during the off-season from November to February, when sales can be lean, Tupa said. It also rents out technicians to businesses in North Dakota, South Dakota and Minnesota.
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"It's great for us, especially in the off-season," he said. "It also gives the technicians an opportunity to get out of the office."
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ByteSpeed recently established its own on-site storage division as well. The service lets local businesses and education customers store backups at ByteSpeed's facilities. Tupa said this appeals to customers that are already comfortable working with ByteSpeed. "We're offering this to customers that have been with us for four or five years, but we are hoping to eventually expand," he said.
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BOLD DATA TURNS TECHS INTO REPS
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When Cogswell Polytechnical College needed 50 graphics workstations in a pinch, systems administrator Rob Balsley called "the Raccoon."
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With only a week to procure the systems for an influx of new students, Balsley turned to a reliable source with a proven ability to provide the Sunnyvale, Calif., college with good service time and again.
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The Raccoon is actually the nickname of Gary Catalano, technical services director for Bold Data Technology, a Fremont, Calif.-based system builder, which assembled, tested and installed the 50 Athlon-based dual-processor workstations in time for the new semester to begin.
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"Gary's always helpful," Balsley said. "I can give him my ideas, ask his pros and cons. I have a general idea of what hardware I want, but I don't always know if there's any problems with it. And if I have any problems, they're here to help. They'll bend over backwards for us."
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Having a strong technical sales staff is one of the key ingredients to Bold Data's success and longevity. Eugene Kiang, CEO of Bold Data, said good customer service is knowing exactly what customers need. "Every customer has unique needs and unique requests," he said. "It's never the same system being sold to two different customers. It's tough on our tech support guys, who have to track every system they sell."
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For Bold Data, many of those tech support guys are also the company's top salespeople. "Often, the sales process is started by a salesman, but our tech guys close the deal," Kiang said. "Sometimes, when a tech guy talks to a tech guy, they get to understand each other and don't have to go back and forth so often."
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That experience has led Bold Data to purposely look for techies who can
with the customer on the sales side. "We advertise for tech support people and slowly push them into sales," Kiang said. "It's not always successful, but it works well for us. The guys who can't do the sales part get put into tech support over the phone."
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Bold Data started out in 1991 manufacturing motherboards, until Intel started its own
business and forced many of its customer-competitors to close their doors. Today, Bold Data offers a full range of servers and systems, with 80 percent of its business going through other solution providers.
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Bold Data hit $248 million in sales for the year ended June 30, 2005, and produced about 70,250 systems, up 34.6 percent from 2004. Accounting for a chunk of those units and growth were Mini-ITX form-factor PCs that it is building in China under a contract with the Shanghai municipal government for reading identification cards.
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The company expects to supply about 25,000 Mini PCs to Shanghai this year and to sell an additional 1,500 a month into the U.S. market, making it a big supplier of the 6.7-inch-square systems for various niche and vertical market applications. Over the past few years, Bold Data's Mini PC sales have grown 30 percent to 40 percent annually, Kiang said.
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While Bold Data's sales in China are expected to grow to 60 percent of its business next year, up from 40 percent this year, the company expects strong growth to continue in the United States as well, thanks to customers such as ASN Depot, Chino Hills, Calif., a distributor and reseller of high-performance notebooks, Mini PCs and surveillance products. Among other things, ASN Depot buys all-in-one PCs and Mini PCs from Bold Data.
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"I'm tied to Bold Data," said Salman Nasir, president of ASN Depot. "I'm a wholesale distributor and work direct with Chinese manufacturers for laptops. I know who Bold Data sources from. But I wouldn't change. I know their service, their RMA abilities. I'd rather pay $20 extra to get their service."
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By focusing on customer service, technical sales and unique products, Bold Data has managed to outpace the market to become the No. 9 White-Hot Performer among
CRN
's 50 Leading System Builders.
| /**/ /**/ |
FUSION MICRO BRANDS ITS BUSINESS
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When Paul Ramirez parted ways as a sales representative with a local white-box distributor to launch his own company in 1997, it was his good fortune that one of his first customers was a Denver-area
with a contract to supply the Denver International Airport with flight information
systems.
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"We did a big 500-piece implementation early in our career and that set us on the path that we went on," said Ramirez, president, CEO and co-founder of Fusion Microsystems, Centennial, Colo. "Since then, we've dealt with many other ISVs as well."
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Today, Fusion's custom-built systems run the flight information displays at 20 airports, and about 40 percent of the company's $10 million business involves providing ISVs in aviation, health care and other verticals with what it calls contract manufacturing services.
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Such vertical market ISVs not only require a healthy mix of desktops, servers, storage arrays and specialized systems, but need
stability,
and life-cycle management services that typically entail longer-term contractual relationships.
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"There's a lot of investment up front, and due to life-cycle management, there are large purchases we have to make," Ramirez said. But he said that also has led to more profitable, steady growth.
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While Fusion's co-founder, CFO and vice president, Travis Turnbull, provides the financial and accounting expertise, Ramirez charts the company's course and manages sales. And sales have been good, growing about 20 percent to 30 percent annually, Ramirez said. But last year, Fusion's growth rate jumped up another notch, with unit sales climbing nearly 34 percent. Ramirez expects similar growth this year.
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"We've been working with different solutions and came up with a few solutions of our own," he said. "And we did a little marketing and showed some really strong growth."
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Fusion actually did more than a little marketing. It hired Marcom Engineering, a high-tech marketing firm in Littleton, Colo., to spruce up its image, revamp its Web site and revitalize its marketing message. Fusion began calling itself a contract manufacturer, promoting its life-cycle management services and putting its Fusion Ion brand on everything.
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David Piper, a principal with Marcom Engineering, said Fusion, like many small businesses, had not spent a lot of time creating and conveying its image. Its Web site carried a lot of its suppliers' logos without explaining exactly what the company itself did. "We turned the focus entirely to their value-add and de-emphasized the brands they carry and instead emphasized the benefits of working with Fusion," Piper said.
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The rebranding worked. Corporate clients and ISVs relate more to the term "contract manufacturer" than "system builder," said Joe Stopski, Fusion's vice president of business relations and development. "It's the same business. We just couched it in terms everyone can understand," he said. "It's the way we're marketing ourselves as a system builder."
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And it may more accurately describe Fusion's core business. The 9,700 units Fusion produced last year included about 6,000 desktops, 400 servers, 200 storage units and 3,000 "other" units. Among those "other" units were an
built for a defense contractor to control a camera and video display, and an appliance for recording and archiving phone calls for third-party verification purposes.
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Fusion also packages solutions for the
market, which accounts for 25 percent of its business. It promotes
solutions and bundles another system for real estate agencies through the Colorado Association of Realtors. The company recently began packaging an off-the-shelf digital-signage solution as well.
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"We compete nationally, but we value our local SMB market," Ramirez said.
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Ramirez said the company tends not to get price shopped or to compete with any particular systems because it's not looking for one-shot deals.
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"We've really developed the value in the products, and solutions are really much more powerful than products alone," he said. "We'll continue to look at different verticals to hit. We have a commitment to solutions design and focused marketing efforts."