Niche Players, Niche Products

Dennis Cichelli is on the hunt.

Cichelli, president of LANTek, a networking solution provider headquartered in Kutztown, Pa., is searching high and low for products and innovations from small, and perhaps lesser-known, companies. Why? Because LANTek wants niche technologies that will help the company build more solutions while still retaining a strict market focus. "We really look hard for new niche technologies today. These types of products haven't saturated the market yet, so there's still a lot of value-add opportunity," Cichelli says.

So far, the gambit is paying off. His software business has grown because the company has added niche security vendors, for example, that complement its network solutions. Their products not only give the solution provider higher margins, but also help LANTek distinguish itself with more unique offerings.

Other small-business resellers are doing the same, expanding their line cards with ISVs and hardware companies flying under the radar. The practice raises an interesting question: Can a VAR become more specialized while expanding at the same time? Small-business solution providers like LANTek say the answer is yes. The trick for these resellers is finding technologies off the beaten path, be they from young start-ups with innovative products or established alternative vendors that make dedicated small-business products.

"I think innovation is pretty healthy today," says Joe Heinzen, president of e-Convergence Solutions, a specialty distributor based in Centreville, Va. "But it's not occurring at the big vendors. It's happening at the smaller, newer entrepreneurial companies."

New Networking

Some small-business VARs look specifically for technologies designed exclusively for their ends of the market. Ben Rinehart, operations manager at Computition in Lewisburg, Pa., says Netopia is one of his best vendors. For his small-business and home-office customers, Rinehart says, Netopia's networking products, such as the R-Series routers, provide better, more stable alternatives to bigger names, including Linksys and Netgear.

"The Netopia routers are phenomenal products," he says. "They have dedicated small-business routers that can handle more than one IP address coming in from a broadband connection." The R-Series also has built-in VPN and a firewall and can be expanded to different WAN connections.

Other resellers are finding niche solutions in fast-emerging markets, such as wireless. Jude Daigle, president of Computer Connections in Greensburg, Pa., says SMC Networks has been very successful for his business, which has begun to concentrate on home technology.

"We've gotten some good accounts because they've taken the time to make calls to customers with us," Daigle says. "They've been very channel-friendly."

Along with wireless accessories, such as antenna and notebook adapters, Computer Connections recently began offering more unique products, such as SMC's Wireless Multimedia Receiver, which is designed to handle digital video, photos and music for home-entertainment centers. While SMC isn't exactly a hot start-up--the networking manufacturer was founded in 1971--the company's more recent multimedia-focused products are attracting VARs intent on unlocking the home-networking market.

Indeed, consumer electronics and home technologies are emerging as popular, high-growth segments on which distributors, such as Ingram Micro, have begun capitalizing; the leading IT distributor recently acquired AVAD, a home-technology distributor that will allow Ingram Micro to carry vendors, including Niles Audio, which makes home-theater automation systems and other audio/video products (see "For Ingram Micro, There's No Place Like Home," page 76). Daigle says his hottest product segment today is media-center systems.

"We're seeing a lot of small businesses get into the media-center trend," he says. "They want the multimedia presentation capabilities for their boardrooms."

Computer Connections also teams with D-Link for its wireless-networking and IP-communications products for small-business customers. Of all the networking niches rising up in the market today, Voice over IP is the most popular. In fact, VoIP growth and adoption in the channel is so strong, resellers say, that it is no longer considered a niche. Still, resellers say smaller, second-tier IP-technology vendors, such as Comdial and Valcom, have been gaining traction; the two companies earlier this year struck a distribution agreement with Tech Data to increase their exposure to the SMB channel.