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Delivering The Whole Yards

By John Longwell, CRN
November 22, 2006    11:00 AM ET

Page 1 of 2

The days when hardware distributors could bolster their businesses by landing a major new vendor have long passed, thanks to consolidation among vendors and distributors. After all, how many lines of motherboards does one distributor need to carry?

But for component distributors supplying an increasingly diverse system builder community, the times may be changing again. Over the past year, distributor ASI brought out as many as 30 new vendors, said Brian Paterson, vice president of marketing at the San Jose, Calif.-based distributor, a leading component supplier.

"Most were fairly insignificant, some have done well," Paterson said. "Even a line like Belkinbefore we didn't carry those tweener thingsbut now it helps to be a single source. When we bring on a major piece, you've got to think, what's the optimized solution?"

In years past, ASI may have added four or five new vendors, and when it did add a vendor it was generally a major player such as Hitachi or Seagate that promised a major chunk of business. Little, niche vendors need not apply.

But these days, distributors say, the growth is coming from custom-system solution providers that are moving into servers, storage and special-purpose computing applications. They are specialized systems building for POS, surveillance, digital signage and industrial applications. And then there are the Linux and AMD platforms, which are gaining ground in the Wintel-dominated custom-system channel.

ASI's line card now includes storage software from Symantec's Veritas, niche six-channel audio cards for specialized DVRs and AOpen mini-PC platforms. Applications such as POS, security and digital signage all require their own complement of vendors. "New directions breed these tiny little pieces of pie," Paterson said.

D&H Distributing, Harrisburg, Pa., is another distributor that has been aggressive in targeting system builders with specialty needs. "We've clearly added dozens of vendors to complement some of the verticals that system builders are chasing," said Dan Schwab, vice president of marketing at D&H.

One example: Video editing has become a hot market, prompting D&H to forge or expand relationships with vendors such as Adobe Systems.

"We've definitely seen a trend for over a year now where D&H and its system builders are getting away from the lowest common denominator. They're building high-end workstations or gaming systems or high-end servers or white-box NAS appliances," Schwab said. "They are all specializing a bit, so what we've done is add a lot of new [specialty areas]."

Bob O'Malley, senior vice president of U.S. marketing at Tech Data, Clearwater, Fla., would second the notion. "The drive now is into special-purpose functionality, so we're seeing system builders move into vertical applications, POS cash registers, highly tuned systems for the gaming community. We're seeing them move upscale into servers and even into custom notebooks," he said.



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