Staying Channel-Focused
Published for the Week Of July 19, 2004
ource Micro, a three-year-old Randolph, N.J.-based system builder, is riding the crest of the white-box wave with 178 percent growth in the number of systems it built last year.
While starting from a modest base in 2002 with an average of 266 systems built per month for its solution provider customers, Source Micro’s output jumped to an average of 740 systems per month in 2003.
“What we do is not unique,” said Source Micro President Robert Schaffer. “But we look at our business as a service business, not a product business. All we do is build systems for solution providers. We don’t do direct.”
Source Micro’s business model is aimed at making the company the backroom operation for solution providers. “If you are a two-man shop and you get an order for 100 machines, you may not have the means to acquire the product at an aggressive price and then have the labor to put the product together. We offer the reseller an option,” Schaffer said.
Source Micro currently works with a few hundred solution providers, but Schaffer said he plans to grow by adding more solution providers and selling more to existing customers.
| AD | |
|---|---|
| id | unit-1659132512259 |
| type | Sponsored post |
“We’re pretty selective in who we deal with,” he said. “A lot of customers will go out and try to randomly attract customers based on price, and typically that doesn’t become a long-term relationship.”
Schaffer said, too, that the company is looking to expand its product offerings. He cited Source Micro’s whitebook business, which has grown from only 10 systems per month in 2002 to 60 systems per month in 2003, as an important initiative.
“Our fast-growing segment is low-price notebook products,” he said. “We’ve been able to provide sub-$700 notebooks, which is an area where resellers haven’t been able to go. You have the big three OEMs advertising $799 notebook prices through retail, and it’s been all but impossible for a small VAR to compete.”
Server sales have also grown steadily, up from 4 per month in 2002 to 10 per month in 2003. And Schaffer says Source Micro has built up to 20 per month this year. But servers are replacement products for existing servers, while notebooks represent a new growth path.
“Notebooks are either replacing a desktop or are being added on for a salesperson on the road,” he said.
RELATED ARTICLES:
Maxtor Cites Channel In Expected 2Q LossAMD Woos System Builders