View From Distribution: Time To Add Value

This could mean making white-box servers virtualization-ready, or building desktops and notebooks with the necessary processing power and memory to handle Microsoft's Windows Vista, or ensuring that machines are configured ready for managed services capabilities.

"System builders have to adapt. They have to have some additional value. Many are doing that," said Steve Ichinaga, senior vice president and general manager of the Systems Integration Division at Synnex, Fremont, Calif. "We see they're getting into virtualization, more managed services. Really what it is, solution providers are providing a custom solution along with their value-added service."

System builders are very good at understanding the customer requirements and designing a full solution with hardware and software, Ichinaga said.

"They will go with this particular motherboard, this platform, this processor because these are the things that are best optimized for this application. That's a key area and that will continue to be the case as more opportunities come up."

Added Frank Raimondi, associate vice president of marketing at Synnex: "System builders have always been on the very leading edge of technology, whether it's digital home, or mobility or digital office stuff, virtualization. They're on the forefront and able to incorporate that [technology] more than a non-custom-system builder."

More system builders are interested in becoming certified in virtualization software or selling applications like Microsoft's Windows Server 2008 because they have evolved to become full solution providers, said Brian Davis, vice president of systems product marketing at Tech Data, Clearwater, Fla.

"Server 2008 requires a lot more memory, especially with virtualization capability built in," Davis said. "And if you look what Intel is really promoting, not just on the system builder side but on the branded side as well, they're really pushing the idea of remote monitoring, remote servicing."

Tech Data added Zenith Infotech, a managed services platform vendor, in part to help system builders build out more complete solutions, Davis said. "[Intel Corp.] has built that [services] capability into the processor itself. A growing portion of our processor biz is Xeon, which allows for a much easier services play, and quad Xeon is growing quickly," he added.

Another area where system builders are increasing their offerings is in digital signage, combining custom systems with larger displays, said Tim Ament, vice president of Ingram Micro's components division.

Next: Virtualization And Storage

"The virtualization and storage piece are definitely two areas where they are focused, but we have a number of systems builders taking advantage of digital signage, with the different software applications, getting tied into that solution," Ament said.

Ingram Micro plans to showcase signage, managed services, virtualization and other solutions for its System ArchiTechs community later this year, Ament said.

"That's why systems builders see value from us. They can tap into other things. We have the components piece but they're looking for [additional] things to bring to customers," he said.

Also, Ingram Micro recently signed original design manufacturer (ODM) Asus as a vendor partner, and Ament expects the relationship to be a boon to system builders looking to add a design-in component to their businesses. For example, the Santa Ana, Calif-based distributor is exploring the idea of helping system builders build ATMs for casinos, and other non-traditional offerings.

"As we look to build out our integration practices, we're getting into the higher-value space of components. Asus will helps us get into the design part of the market. Those machines have components, hard drives, processors. It's a little premature, but it's something we're looking at," Ament said.

Synnex also sees a lot of action in the appliance space, especially with ISVs looking for the right device for their application, Ichinaga said.

"People with a software solution are not supply chain experts, but they need to deliver a full solution so they come to us for full integration, supply chain services," he said. "We are seeing more people come to us with specific applications and we are helping them define what that [solution] is going to be."

Dan Schwab, vice president of marketing at D&H Distributing Inc., Harrisburg, Pa., said system builders have migrated in two directions the past few years. Some started selling higher-end gaming systems and workstations to differentiate themselves from branded solutions. Others changed their business model to become more VAR than systems builder, he said.

"They're still building systems but they're getting into networking, printing solutions. This is a macroeconomic trend in the last few years. Systems builders just building basic systems, it's hard to find a value-add," Schwab said. "Our system builders are deploying total solutions. As they start selling surveillance or digital signage, they're basing it off white-box systems."

Vendors such as Seagate Technologies Inc., which has hard drives specifically designed for video storage, have helped system builders put together complete solutions, Schwab said.

"[Custom systems] gives them the flexibility. Let's say an end user decides to move to wireless digital signage or multiple screens, the systems builder is already comfortable with the box to handle the new application."