Toshiba America CEO Turns Heat Up On SMB Channel Charge

Loaded for IT bear, Toshiba America vows to crack open the SMB market with a new multipronged channel offensive that includes new hardware, partner perks and a strengthened IT strategy, according to Mark Simons, president and CEO, Toshiba America Information Systems, who sat down with CRN for an exclusive interview.

Simons, in charge of the $65 billion Japanese powerhouse's American beachhead, said Toshiba is making major enhancements to its partner program as part of a corporate refocusing on SMB and the channel here in the U.S.

"The total PC business had gotten so large that managing it as one group didn't make sense," Simons said. "We realized Toshiba needed more focus on specific business opportunities. That forced us to separate our consumer and commercial PC business. We created a business solutions division and made revamping our channel strategy a priority."

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The move comes four months after Toshiba announced a major restructuring of its PC business to focus on the B2B space and "significantly downsize" its B2C business by pulling out of unspecified B2C geographic markets. Simons said Toshiba's U.S. consumer PC market remains intact, and commercial business now goes into overdrive.

John Krikke, vice president of Onward Computer Systems, a Burlington, Ontario-based Microsoft partner for 16 years and Microsoft’s SMB Partner Area Lead (PAL) for Canada, said he was heartened to see Toshiba recommitting to the channel.

"We have been a Toshiba partner for quite a while, and we have done quite a bit with some school boards. The problem is the partner program became a bit fragmented and their offering has not been as strong as some of the competitors like HP and Lenovo," said Krikke. "They have had a heavier retail play and less of VAR play. So they have fallen off the radar somewhat in the minds of resellers. It's great to see them refocusing and recommitting to the channel."

Krikke said he is looking forward to a new robust channel commitment that could benefit partners. "If they are coming back to the channel, they need channel best practices," he said. "They need 100 percent commitment not just give it a try and go away again. That serves nobody. We are looking for long term relationships. We want to see them succeed and we want to succeed with them. It has to be a channel program with clearly understood value."

The frontlines of Toshiba's channel offensive includes a beefed-up PC portfolio aimed at specific niches that include SMB, but also heath care and opportunities in education beyond just K-through-12.

NEXT: Toshiba's Hardware Trifecta Hopefuls

"Toshiba has many distinct business pillars, ranging from energy, storage and health care. PCs cut across all those pillars," Simons said. "There are very specific opportunities for us within each of those areas."

Central to Toshiba's PC offensive is its Tecra Z-series laptops that come in multiple form factors, including the Z50 clamshell, the PC maker's flagship notebook for the SMB with prices starting at $700. There is also the affordable Tecra C-series with the base model C50-B1500 priced aggressively for SOHO and SMB markets at $580.

"Toshiba has never been the most affordable option, but with the C50, now I can talk to my customers about Toshiba without worrying about sticker shock," said Sheri Holland, general manager of DRLT-Higher Calling IT, a Toshiba partner based in Atlanta. "Toshiba's lineup now has something any company can work with."

On the thin-and-light front there is Toshiba's 2-in-1 Z20t, introduced earlier this month, which runs for 17 hours under normal use between charges, according to the company. The PC will come in three models with the base configuration starting at $1,400 and a fully loaded version with a new Broadwell Core M 5Y71 chip priced at $1,700.

"The difference we want to highlight is, while our competitors are taking products that are basically consumer-oriented and putting a little bit of commercial technology inside and putting it back out into the channel, we are actually bringing enterprise-class engineering into the channel with our PCs," Simons said. "Toshiba uses its own facilities, our own engineering, and we are not outsourcing for mass-volume mass production."

Finally, Toshiba introduced its Encore 2 Write Windows-based tablet, which comes with a Wacom digitizer pen and suite of productivity apps, such as TruNote, that supports note-taking, archiving and searching, along with handwriting recognition. Pricing starts at $350 for an 8-inch model running Windows 8.1 and including the digitizer pen.

"Our edge over Dell, HP and Lenovo is reliability," Simons said. "We have the lowest failure rates in the industry."

NEXT: Toshiba Makes Reliability Priority No. 1

Current and independent laptop reliability data isn't easy to come by, however, Toshiba has been recognized in the past for durability.

According to a 2009 study by SquareTrade, a company that sells protection plans for laptops and cellphones, Toshiba is the second-most reliable laptop maker behind Acer. According to 2013 laptop reliability data from Soluto, which uses data from its cloud-based PC monitoring and management software to track device dependability, Toshiba failed to crack a top 10 list in the most reliable model laptops. Consumer Reports, in 2014, ranked Toshiba within its top 3 brands of reliable laptops, based on a survey of 50,000 users.

Simons said Toshiba's PC push coincides with new channel incentives, including allowing partners to register deals of fewer than 29 PCs, on-site instant rebates on system sales as few as four PCs and the introduction of reduced priced demo gear to partners.

Toshiba, with 500 authorized North American resellers and 3,000 preferred partners, has had an on-again, off-again relationship with the channel, according to VARs. But Simons bristles at the notion that its latest internal reorg and channel refocus show anything less than a 110 percent commitment to its partner community.

"We have been working with the channel since 1992. We are committed to the channel," Simons said. "We did this reorg last year, putting the channel and partner first to show they are core to the company's business model."

Simons said within Toshiba America Information Systems, the channel represents about 25 percent of enterprise revenue compared to direct sales. Within SMB, the channel represents 80 percent of revenue, he said.

"From a growth perspective, our key goal is to get back in the SMB market. The channel is the way we are going to do that," Simons said. "Our goal is to grow our overall business within SMB, education and health care. Our channel business is really what we see as the fastest way to get a very big piece of those segments."

NEXT: Winning A Piece Of The Trillion Dollar SMB Pie

According to Gartner research, SMB IT spending represented 44 percent of the $3.8 trillion in overall IT spending globally in 2013. In 2015, Gartner forecasts that SMB IT spending will cross the $1 trillion mark with mobility, analytics and cloud-driving SMB priorities.

To win a bigger piece of the $1 trillion pie, Simons said, Toshiba wants to go "deeper and wider" within its existing partner roster as opposed to growing the number of solution providers. And to win the hearts and minds of its channel base, Toshiba has kicked its tech chops up a notch when it comes to its latest PC systems.

Reliability is something that Toshiba stresses, and to prove it the company now ships its Tecra PCs with a 6-month system replacement pledge. If any major part fails within the first six months, Toshiba will replace the system no questions asked -- no more irking users with lengthy and complicated repairs.

Add to that Toshiba's own R&D that goes into building PCs, starting at the BIOS all the way to the chassis, Simons said.

"The BIOS is one of our biggest advantages," Simons said. "We are probably the only OEM focused developing and manufacturing our products from the BIOS up."

The BIOS, Toshiba believes, is key to controlling security, management and quality of its systems. "We write our own BIOS, which allows us to customize systems for our customers from the time they press the power button on. That's a huge advantage over our competitors that use off-the-shelf BIOS," Simons said.

"We may not be No. 1, but that's not the goal," said Simons. At least for now, he said, Toshiba's goal is to be the best.

PUBLISHED JAN. 28, 2015