D&H Sees Double-Digit Business Growth From XP, Education And More

"Business is very good."

That's what D&H Co-President Dan Schwab had to say about the strong double-digit growth that the distributor has seen in the first half of its fiscal year.

The company sales as a whole were up 13.3 percent over the first half of the year, which ended last Friday, Schwab said in an interview with CRN at the D&H Mid-Atlantic Fall Technology Show in Hershey, Pa., on Wednesday, and was driven by factors on all sides of the business. D&H is a private company, so it is not required to disclose its full earnings publicly.

Schwab said that the expiration of XP support continues to drive growth for D&H as small businesses, part of its primarily clientele, were slower to upgrade than enterprises.

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"D&H, probably more so than others, is still reaping some XP ... In the small business opportunity, if you think about a company with 50 employees, they may have not made the migration. A company with 500 employees clearly has. It's basically the long tail of the channel that we're working with our manufacturers to make sure that we maximize the opportunity with our partners," Schwab said.

The growth from XP support expiration, however, is starting to dwindle and Schwab said he expects it to wrap up fully by the end of the year.

Dovetailing into the end of the XP boost is the ramp-up of the expiration of support for Server 2003, around which Schwab said D&H is already beefing up training for its resellers. At the Fall Mid-Atlantic Tradeshow alone, D&H held more than eight hours of Server 2003-dedicated training for resellers. The reason, Schwab said, is that he sees it as an even bigger opportunity for growth for resellers than the end of XP support, as it launches easily into conversations about an entire back-office refresh, including networking, storage, security and more.

"It's a once-in-a-decade opportunity," Schwab said. "From a small-business-community standpoint, we believe the onus is on us to help our resellers be successful. We're creating a lot of tools, including end-user marketing, that they can take to their end users to help highlight the risk."

Server and networking upgrades have been seeing strong growth on their own, regardless of Server 2003 refreshes, Schwab said. He said a lot of the time the growth, whether it is digital signage and security, drive upgrades in network and security to accommodate them. He said strategic vendor relationships with HP, Lenovo, Cisco and others have helped bring those technologies down from the enterprise to the small business.

"I just think, generally speaking, some of the enterprise technologies that we've been bringing down to small business, as server and networking solutions, has been a high-growth area," Schwab said.

Schwab said that D&H also is seeing growth driven by the education market, especially around the Common Core standards.

As many other distributors have seen this year, PC sales were up in the first half of the year, Schwab said, regardless of the XP refresh. He said that new devices and vendor incentives have made it appealing for end users to upgrade. Mobile also was up for the distributor, he said, especially around two-in-one tablets.

Going forward, Schwab said that he anticipates the growth for the distributor to continue, and he expects the company to hit $3.5 billion in revenue by the end of the year.

"We're excited about our growth, and we're excited about the opportunities ahead," Schwab said.

PUBLISHED NOV. 6, 2014