Margin Makers

Projectors
Kevin Baylor, owner of Aequus IT, a Bradenton, Fla.-based solution provider, said he has found some margin opportunities in the projector space even though his company focuses on services, not hardware. Success comes with engaging the customer.

"We have multiple conversations, try to create road maps for how technology fits in with their user needs," Baylor said. "If I see they have a conference room, I'll ask what's their need for a projector. Especially larger clients, we'll see they have multiple conference rooms and they're looking for projectors." Baylor said his company provides Canon or Dell projectors and the devices will add value to an overall project.

"We've re-energized our projector [total addressable market]," said Jeff Volpe, vice president of marketing at ViewSonic Americas, Walnut, Calif. "We can walk in [to a customer account] with a VAR, or they can walk in on behalf of ViewSonic. They can see a small conference room, and they can see an opportunity to add value with a 4,500-lumen projector," Volpe said. Earlier this year, ViewSonic introduced an iPod-compatible projector that has reinvigorated that part of its business. ViewSonic has multiple touch points with solution providers, with growing and profitable display and TV businesses. The company also offers rebates and technical support in those segments.

Other projector makers, like pure player InFocus, Wilsonville, Ore., are introducing mobile projectors in an effort to cash in—with solution providers—on the opportunities of delivering value to an increasingly mobile workforce. Company executives believe the mobile projector segment is capable of maintaining 4-digit average selling prices with healthy product margins.

Displays
Although margins in the higher-end LCD space continue to shrink and fight downward pressure, the news isn't all bad. Higher-end and larger displays—once mainly located in higher-end engineering or design shops at large enterprises—are now affordable to small and midsize businesses. That opens up the technology to a broader customer set and, at the same time, allows solution providers to deliver a more potent solution.

"The 22-inch is close in price now to even the 19-inch," said Rob Kalman, vice president of U.S. marketing at distributor SED International, Tucker, Ga. Kalman said Acer, San Jose, Calif., has been adept at moving first on price cuts to the channel, allowing VARs to engage customers quickly with lower-priced but higher-performing LCDs. "Acer is very quick to be at the right price when components drop," Kalman said.

Mary Meeker, president of MEM Systems, a Bonsall, Calif., solution provider and partner of NEC Display Solutions of America, said the best way to push margin up from single digits is to use LCDs as part of a broader signage solution—one that includes software, servers and services. "With the display devices, they have gotten so short on margins I'm lucky to get 5 [percent] to 10 percent margin," Meeker said. "But we then take that particular [LCD or plasma] product, take the computer items that deliver a digital signage solution, and the peripherals end up contributing to a bigger margin," she said. "Sometimes you can take that margin from 8 [percent] on the average, and you can lift it to probably 25 percent or 30 percent margin."

Printers
Among Oki Data products that VARs can deliver to enterprises of all sizes is its C8800 series desktop tabloid printer. It's priced at $2,399, prints 11 x 17-inch sheets of paper, and, for solution providers in the ProfitOps program, offers 12 points of discount up front and the potential for other incentives. "We're educating [VARs on] how to make money," said Jackie Paralis, Oki Data's senior marketing manager for channel development.

Among other printer vendors with new products or programs that they believe will be a target-rich opportunity for margins: Lexmark International, Lexington, Ky., which released the Legal Partner multifunction printer, an all-in-one, 50-ppm unit with functions like "Scan to Court" for lawyers to keep within guidelines of most courts that accept digital files; and Stamford, Conn.-based Xerox, with a series of multifunction printers including the WorkCentre 7328.

Konica Minolta, Ramsey, N.J., is talking up potential future releases including the bizhub C30P/C30PX, and several software solutions that integrate with its hardware including DocRecord, an SMB document management and archiving solution. Steve Jones, executive vice president for dealer sales, said combining the company's hardware solutions with its software solution stack can provide an offering that gives solution providers margins of 35 percent to 50 percent, depending on the size and configuration of the deal.

Another important aspect is the attached sales of ink, toner and paper—the lucrative, but often elusive, supplies business. Karla Metzler, president of Computer Color Graphix, an Irving, Texas-based solution provider, said Xerox has begun to strengthen this part of the business through its PagePack initiative, a fixed-price, monthly program solution providers can sell to their customers that provides automatic delivery of supplies to the end user each month. "It eliminates the reseller constantly having to battle [customers] shopping around elsewhere for a supplier, either on the Web or at the next dealer. It allows you to wrap it all up and tailor it to the customer. You can make about 20 points on the service and supply offering, and you don't have to warehouse the product," Metzler said.

Next: Scanners