2009 State of Technology: Peripherals

When we last fielded our State of Technology: Peripherals survey a year ago, the theme that emerged most prominently from a range of solution provider responses was: "The box is out. The solution is in." Well, that notion wasn't just a cute catchphrase then, and it's certainly not now.

With continuing economic downturn expected to keep budgets squeezed and morale skeptical in 2009, it's the box-pushers who sink and the true solution providers who swim -- and thrive. How well can you deliver?

"Delivering product efficiently to save costs, that's what makes the deal," stressed Curtiz Gangi, director of IT channel sales at Eaton Corp. "If you've mismanaged your business, you've mismanaged your business. That's a cold, hard way to look at it, maybe, but it's the truth."

The economy was certainly on solution providers' minds this year, with 78 percent of those surveyed in the 2009 State of Technology: Peripherals survey picking economic downturn as one of their top three inhibitors to growth, alongside aggressive pricing/commoditization (87 percent) and competition (72 percent).

More than 60 percent of the 774 North American solution providers surveyed said that in the past year the way they sell peripherals had changed significantly. Thirty percent said they sold few peripherals direct and referred many customers to DMRs; 35 percent said they made recommendations and let customers fulfill peripherals sales through their own sources. Another 22 percent said they have more leasing options available for peripherals than they did a year ago.

The game is changing. And yet, more than 68 percent of solution providers surveyed indicated that vendor direct-sales organizations were still their greatest source of competition for peripherals, followed by many of those same business DMRs like CDW Corp., PC Connection Inc. and Insight (58 percent), e-tailers such as Tiger Direct, Newegg.com and Amazon.com (54 percent) and brick-and-mortar retail outlets like Best Buy (45 percent).

New advances in everything from 24-inch, single-panel desktop LCDs to rack enclosures are making products in each of these areas more sophisticated and, in many cases, more affordable. They're part of a whole much greater than the sum of its parts: a total solution. Understanding how that solution comes together could be the difference between losing a sale by hawking hardware, and winning the sale by telling the story.

"It's difficult to get rich selling racks," said Philip C. Smith, vice president of sales

for Datec Inc., a Seattle-based solution provider. "But if you understand racks and are willing to tell a story about them, then they become a reasonably important part of a cost-effective solution."

Solution providers said the ability to upsell (59 percent) was the greatest growth opportunity for peripherals. "Small" is also considerably big for peripherals solution providers: 63 percent of those surveyed said it's in small businesses of between 20 and 99 employees where peripherals innovation counts most, followed by lower midsize businesses (100-499 employees) and very small businesses (5-19 employees).

In lean times especially, a vendor's channel program has to inspire confidence.

"It's about innovating," said Marc Wolfe, CEO of ProActive, a solution provider based in Oakland, N.J. "It's not just about improvement for improvement's sake. The larger a company gets, the easier it can be to become disconnected with the channel. ... They deal with only the largest and more enterprise-specific accounts. We deal with the enterprise, too, but we try to deal with solutions as if they're going to a small division of that enterprise. I'd like more of our [vendor] partners to appreciate that."

Understanding the channel, VARs said, means understanding what solution providers need to make those sales.

"They're in dire need of marketing support," said Jackie Paralis, senior marketing manager of channel development and programs at Mount Laurel, N.J.-based Oki Data Americas. "They tell us, 'Give me leads.' Customer retention is on their minds. ... Solution providers' biggest fear is customer retention, not necessarily new customers."

Although the list of major vendors with hands in peripherals casts a wide net over the technology industry as a whole, there's but a handful that solution providers have consistently told VARBusiness are the best around when it comes to offerings, channel support and understanding of how peripherals are sold through the channel effectively.

One of those, solution providers have been telling us for a while now, is APC.

APC and Rob McKernan, president of the vendor's North America business, bested the competition among preferred vendors in both the power protection/management and racks/rack accessories categories of the survey. Those high marks continued a streak of strong showings for APC in Everything Channel research throughout the past 12 months; not only did the West Kingston, R.I.-based vendor do well in the 2008 Channel Champions and 2008 Channel Affinity index, but McKernan was also named to the list of the 2008 Top 25 Channel Executives.

"If you don't clearly message your program's value ... you don't clearly communicate how best to engage with your company," McKernan said when asked what he does to keep APC's channel happy. "No one does it perfectly, and if you don't do it consistently in multiple forms ... you get frustration. We have a lot of partners because you can work with APC in many different ways."

The following pages explore peripherals trends in six categories, with technological advancements, sales habits, preferred vendors and expected revenue streams all going under our microscope. Onward.