Distributor Sees Small Business Server Boom

The Harrisburg, Pa.-based distributor has seen sales of servers and server components grow by leaps and bounds in the past several quarters, after it took some steps to overcome VARs' reticence and provide them with solutions they can take to market.

Sales of integrated servers grew 179 percent between the first and second quarters and then another 280 percent between the second and third. Server motherboards and chassis also grew by triple-digit percentages in that time.

D&H predicts that the market will continue to boom and expects to see 35 percent growth in SMB servers in 2008 and 40 percent growth in file/print servers. Backup and storage servers should grow by 15 percent.

For the distributor, small business is where it's at, and it's holding the hands of its resellers as they take the server plunge.

"We think that's where the true un-tapped demand is out there in the server world. More often than not it's a fairly complex solution. When you throw a lot of different types of solutions in front of a reseller or an end-user sometimes the only thing you get is inertia. There are too many decisions to be made so they don't make any decisions at all," said Michael Schwab, vice president of purchasing at D&H.

"What we've done to help that is put some technical expertise on our sales floor, offer that free of charge to our reseller base, and make them the resident experts in selling server technologies, understanding what the customer is looking for, and then coordinating software and hardware solutions that are most practical to make that happening," he said.

D&H is also offering trainings on servers and educating VARs on the different solutions available, including Microsoft's Small Business Server. White-box servers are especially hot, said Schwab.

"I think you can configure the server to the reseller's needs very effectively. It takes a lot of the complexity and authorization requirements out of it from a reseller perspective and there's an easier point of entry when it comes to the reseller," he said. "There's really the ability to do some things that are beyond what they've done in the past with the technology today."

Tim Hoffman, owner of Hoffman Computer Associates, a small-business VAR in Lititz, Penn., said that he has seen small business interest in servers rise as well, often driven by business applications.

"The businesses are relying on them so heavily right now," said Hoffman. "I think they've realized that a client-server environment is necessary. [Sometimes,] the application people that write the software insist on having client-server instead of going to a peer to peer."

Customers are excited about making the change.

"It's not a really hard sell, at least where I'm at right now The decision is made generally by a lot of people who don't have real good IT experience but they have specifications and they ask questions," said Hoffman. "Hardware reliability has added to the sense of security that the stuff does actually work. In the old days hard drives would drop off the face of the earth. I insist on servers now with redundant drives and if they have the money to spend things like backup."

As customers ask for more advanced technologies, distributors have the ability to expand the solutions offered by their VAR customers, like adding backup and recovery solutions when selling servers.

"The end users are going to demand it over time and so if we can help the resellers get there quicker rather than later we think that's a value they can then bring to their end customer," said Schwab.

"If you think about the variety of small businesses, it's tremendous," he said. "There is technology out there that they could be taking advantage of today and they're not."