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The Price Is Right

Arbitech, a Laguna Beach, Calif., distributor specializing in refurbished and overstocked server, storage and networking hardware, is carving a niche among VARs by offering prices of up to 15 percent below those of larger distributors.

Some solution providers, in fact, said Arbitech is fast becoming a strong secondary source for hardware. The company bills itself as "The leading independent distributor for tier-one computer products manufactured by Compaq/HP, IBM, Cisco, Sun, Microsoft, Toshiba, Intel, 3Com, Adaptec, Enterasys and Emulex."

Bob Parsons, president of Automated Office Solutions, Evansville, Ind., said he relies on Arbitech for 10 percent to 15 percent of his annual $2 million in product purchases and strays from his primary distributor, Tech Data, only because of better pricing.

"The only thing that can make us switch is that the price is so significantly lower than we can get from Tech Data that ... we have to take a look at it," Parsons said. For example, certain Hewlett-Packard Proliant servers cost 10 percent to 15 percent less than his price on comparable units from Tech Data, he said.

Likewise, Paul Whalley, vice president at Whalley Computer Associates, said the Southwick, Mass.-based VAR's purchases through Arbitech have risen to 15 percent of its total product business. The distributor is now Whalley Computer's No. 2 procurement source, after Ingram Micro, he said.

Arbitech regularly e-mails VARs to notify them, for instance, that it has certain HP or IBM servers, Parsons said. "We see who we are working with at the time and if the servers [from Arbitech] might be a good fit for our client," he said, adding that he may sell a server that's the best fit for a client, price it at Tech Data and then go to Arbitech to see if its price is lower.

Arbitech COO Josh McCarter said the company buys products directly from the major hardware vendors, but he declined to elaborate on the distributor's vendor relationships.

"Everything is fully legit," McCarter said, noting that the products Arbitech sells come with full warranties. "You don't grow a $100 million business without being fully legit."

Arbitech offers savings because it focuses on servers, storage and networking, McCarter said. "We aren't the place to come to for desktops and laptops."

The company also stocks many discontinued products. "A lot of times, people come to us to find parts they can't find in other places," McCarter said. "[Major distributors] all focus on new, in-distribution products."

SCOTT CAMPBELL contributed to this story.

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