Distributors Converge on Home-Networking, Consumer-Electronics Trends

In time for the recent Consumer Electronics Show in Las Vegas--which featured such industry luminaries as Hewlett-Packard chief executive Carly Fiorina and Dell CEO Michael Dell hawking the newest, most attractive gadgets--distributors such as Ingram Micro and D&H Distributing launched aggressive efforts to make the most of these and similar products. That's especially true as high-end consumer electronics make their way into homes to accompany standard PCs.

What these and other distributors hope to capitalize on is the growing trend among solution providers to help corporate customers extend their infrastructures into the homes of their executives and employees.

"It's a huge trend," says Brian Okun, director of marketing at Chips Computer Consulting, a solution provider based in Lake Success, N.Y. "From what we're seeing from our clients today, connecting the home network to the corporate network is imperative."

Chips, which is a member of Ingram Micro's VentureTech Network program, has been following the increasing need for security infrastructure around home networks. Okun says Ingram Micro recently began promoting digital convergence and consumer electronics to its VARs and is aiming to help them identify appropriate solution sets for their customers.

Ingram Micro traditionally reserved partnerships with consumer-electronics vendors such as Panasonic and Sony for its European and Asian markets. Now, however, the industry's largest IT distributor is moving beyond business-technology solutions and is focusing more on consumer and home-networking products for North America, expanding product lines to include such vendors as BenQ, Samsung and Sony.

The distributor says it's in negotiations with several consumer-electronics vendors to expand partnerships in the United States and Canada. Ingram Micro recently signed an agreement with Norcent Technology, a U.S. technology company that carries DVD players and flat-panel, high-definition and plasma television sets, along with optical drives, computer monitors, and memory and semiconductor storage products.

In addition to consumer-electronics vendors joining up with distributors, several vendors that in the past have stuck to business solutions and products have now added home networks and digital convergence to their spectra. "Look at Cisco's acquisition last year of Linksys," Okun says.

D&H Distributing has had a long history with consumer-electronics and home-entertainment technology, and the distributor has begun new efforts to boost its business. D&H recently announced it will provide free training on digital-convergence products, including "V-Train" online presentations on IP cameras and plasma TVs. D&H says its "crossover sales" of digital-convergence and consumer-electronics products have increased more than 10 percent during the past five months, driven in part by wireless-networking products and plasma/LCD TVs.

Mike Healey, president of TenCorp, a solution provider based in Needham, Mass., is one of many VARs riding the digital-convergence wave with some help from distributors such as D&H.

"We don't have a whole lot of home-networking customers, but the digital-convergence trend has been huge for us," Healey says. "D&H has put a ton of resources and effort into the convergence market."

One of TenCorp's biggest markets of late has been extending corporate networks out to home offices. Healey says installing voice, data and video as well as security measures, such as VPNs, has provided TenCorp with a strong revenue source. As for consumer IT products for the home, Healey says the market is more challenging because as technology gets more complex, service labor becomes more expensive. Also, many households are unwilling to spend a lot of money on consumer electronics, especially in the current economy.

"The home-technology market is very price-sensitive, and it can be very demanding," Healey says.

Market-research firm IDC is predicting that "pro-sumer" combination products will continue to gain momentum as vendors and distributors put more resources into home-networking and digital convergence. For example, IDC recently forecasted that DVD-recorder decks will soon surpass play-only machines and grow at a compound annual growth rate of 126 percent between 2003 and 2007. As the demand for consumer-technology products continues to swell, more solution providers are looking to ride the wave to fortune.

"With a little bit of economic recovery taking place, people are really looking at combining their voice, data, networks and everything else," Healey says. "Now it's going to get interesting."