Bell Microproducts Bets Big On Storage

The San Jose-based distributor made acquisitions, added vendor lines and developed its own product lines all in preparation for an expected boom in the storage market.

According to industry research firm Gartner Dataquest, the overall market for multiuser servers and storage will reach $59 billion by 2003. The percentage of budgets allocated to storage should climb to more than 75 percent in 2003 from 43 percent in 1998, according to Bell Microproducts.

Bell Microsystems wants to help solution providers gain access to the estimated 40 percent of unused storage capacity.

Bell Microproducts' growth is being fueled by its approach to the market,a combination of major branded storage lines, its own server products and a heavy focus on services, company executives said. Bell Microproducts now distributes more than 125 brand-name product lines, as well as its own BellStor and Rorke Data storage brands and systems from subsidiary Trademark Computer Products.

And the distributor isn't afraid to acquire companies that fill gaps in its offerings. Since 1998, it has purchased eight companies. Last year, the distributor acquired Edison, N.J., solution provider Total Tec Systems and two international distributors,Netherlands-based TTP and Toronto-based Forefront Graphics.

id
unit-1659132512259
type
Sponsored post

"Total Tec's industry knowledge, customer relationships and expertise in enterprise computing and storage solutions, combined with Bell Microproducts' technology breadth, supply chain management capabilities and other storage-centric solution focus, creates a complementary strategy for growth and the opportunity to expand into new markets," said Total Tec CEO Frank Law in a statement shortly after the acquisition late last year.

Bell Microproducts can quickly adapt to changes in the market too, said CEO Don Bell. After finding that most storage capacity isn't being fully utilized, the company plans to show solution providers how to create opportunities with customers by tapping unused storage.

Nearly 40 percent of all storage capacity in the marketplace isn't being used because it's too hard to get to, Bell said. The company's push will be to educate solution providers about SAN/NAS opportunities that make storage more accessible,and help boost revenue.

"The network is really the key to the future," said Bell, adding that servers and storage are becoming more integrated into solutions.

Bell Microproducts' focus on the niche storage technologies has given it a slight boost in a slow economy while broadline distributors that offer similar products are still struggling financially. Bell Microproducts' revenue for 2001 reached a company record $2 billion, up 11 percent from $1.8 billion in 2000. Still, its loss before special charges was $4.7 million, or 29 cents per share, compared with net income of $17.2 million, or $1.05 per share in 2000. Gross profit margins increased during the fourth quarter of 2001 vs. the prior quarter primarily due to a favorable shift in the company's product mix.

Bell said he sees a lot of opportunity for the distributor to take advantage of emerging technologies such as SANs, iSCSI, Infiniband and Gigabit Ethernet. Yet as broadliners and other competitors continue to expand storage offerings, he sees a challenge for channel partners to price products for value.

Adding new vendors and filling out product lines is a top priority for Bell Microproducts. The company recently began distributing Lucent Technologies' products and services,including the OptiStar EdgeSwitch router that expands SAN distances,in the United States. The agreement also covers Lucent's data-networking and broadband-access products, including routers.

Bell Microproducts is also aggressively pursuing a global expansion plan, buoyed by a new relationship with Hewlett-Packard to sell its mobile, imaging and storage products in Latin America. HP's digital audiotape and digital linear tape technology is key to Bell Microproducts Latin America's success in that region, the company said.