Server Sales Help Propel D&H Growth, Distributor Exec Says

Driven by a massive 55 percent increase in server sales over 2015, largely propelled by the Windows Server 2003 upgrade cycle, D&H Distributing said its sales grew 7 percent from June through November.

According to Jeff Davis, senior vice president of sales, D&H was expecting a sizable boost in server sales after Microsoft stopped servicing Server 2003 in July. However, Davis said he was surprised by the growth in sales in other product areas, propelling D&H's growth higher than that of the market.

"If you look at our growth, and you compare it to some of our competitors, clearly we are taking some share in the marketplace," he said.

[Related: D&H Distributing Ramps Up K-12 Education Push For Solution Providers]

Along with the jump in server sales, D&H reported double-digit growth in six other product areas including a 30.9 percent increase in the sale of monitors and displays, 29.2 percent in security products, 12.3 percent in notebooks and 22.9 percent in desktops.

"I don’t know that others are reaching this level of growth," Davis said.

According to Davis, the Harrisburg, Pa.-based distributor, which focuses on delivering products to SMB solution providers, won the market share with a "high touch" sales model that consistently reaches out to its customer base.

"We make twice as many calls out than we take in," Davis said.

D&H invested in its sales force throughout the year Davis said, adding headcount and support to the division.

Server 2003 Refresh

The investment paid off for D&H during the Server 2003 refresh cycle, which allowed the company to take advantage of the opportunities available thanks to the ending of service, including upgrades of back-office systems and ancillary networking solutions.

"Got way out in front of that," Davis said. "We did a lot of educational seminars, webinars and focused on our solution lab to educate the resellers on that upgrade opportunity."

However, Davis said that the server opportunity will carry over into the coming year, as VAR clients that did not want to upgrade earlier realize the importance of doing so.

"There is always that group that is late to the party," he said. "I expect there will be a long tail for Server 2003. The tail was long during the XP refresh (in 2014), and I think this one will continue to contribute into the next year." However, he said that contribution to sales will be much smaller moving forward.

Education Initiatives

Yet Davis said he was most surprised by the growth of desktops and notebooks, products whose sales were not growing well in the general market, but grew in the double digits for the distributor throughout the past year.

He attributed that growth to the company’s investment in the education market.

"There was a big initiative in the K-12 market this year, which drove a very high level of growth and revenue in in Google Chromebook products … That was a big initiative," he said.

D&H doubled its effort in headcount and initiatives in the K-12 space he said, and was also helped by the E-rate, a federal program that provides discounts to schools to fund technology..

D&H’s success is driven by its ability to synchronize opportunities and education for its solution-provider partners Davis said.

The distributor will continue to focus around the K-12 opportunity in 2016 and continue to provide resources, tools and support for solution providers, he added, especially those in smaller markets.

Looking Into 2016

According to Davis, the company plans to continue its growth trajectory in 2016 by focusing on upcoming refresh cycles and "still emerging" technologies as possible growth areas

"I think there is a good opportunity with the Intel Skylake 6 gen processor," he said, because it was released late in the year, and those looking to upgrade will most likely do so in 2016.

Davis added that there will also be a refresh cycle on notebooks in the under-$500 price range throughout 2016.

Other emerging technologies D&H will focus on include 3-D printing solutions and smart-office devices as well. Davis said automation devices such as Amazon Echo are gaining traction thanks to the functionality being built into them.

In the upcoming year, he said, a number of smaller companies are expected to upgrade their systems and move toward such solutions as digital signage.

"There are always great refresh and upgrade opportunities there we will be right in the middle of," Davis said.

PUBLISHED DEC. 9, 2015