VARs See Vertical Value For Netbooks

As the burgeoning netbook market continues to gain both buzz and traction, VARs are starting to find ways to work these slimmed-down notebooks into business-class solutions.

The breadth of the channel opportunity remains a bit murky, but solution providers are working to define the spaces in which a low-cost, ultra-portable PC will be most effective. Early front-runners include school systems and government agencies. And while a business customer with a highly mobile workforce might seem like a natural fit for netbooks, that market still hasn't matured, solution providers said.

Vendors are getting into the netbook act as quickly as they can, and several are looking for ways to leverage their channel partnerships to help ramp up netbook sales. Both Acer and Dell, for example, have targeted the education market segment as a good place for them and their channel partners to play. For its part, Acer is offering low-cost demo units of its Aspire One 8.9-inch netbook to entice partners to make education bids. Dell, meanwhile, has partnered with software firm Stoneware, tapping its virtual desktop technology to create managed services targeted at education customers that solution providers can sell. And vendors such as Hewlett-Packard, Lenovo and Samsung are working to build up channel partnerships around the devices, channel partners said.

One of the most important things vendors can do to create strong channel partnerships in the netbook space is to keep the information flowing, said Scott Darling, president and CEO of Pleasanton, Calif.-based systems reseller Portable One, which is working with netbook vendors such as Asus and Samsung.

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"I want to make sure information is coming my direction," Darling said. "I want to know about changes in key features and the latest specifications. For me, it's important that I'm abreast of the latest technological changes."

The Education Opportunity

The education market, particularly the K-12 space, is the market where solution providers say they are best positioned to make inroads with netbooks. With school budgets shrinking, the opportunity to provide a low-cost computing solution is ripe for the taking.

San Jose, Calif.-based Acer America in November launched its K-12 Seed Unit Program, an outreach initiative aimed at helping jump-start netbook sales. The computer manufacturer sent out e-mails promoting a low-cost trial for channel partners who might be interested in reselling netbooks into schools.

Bob Parsons, president of Evansville, Ind.-based systems reseller Automated Office Solutions, saw the promotion and decided to give it a try. "I didn't pay much attention to the Acer e-mail other than it offered a machine for $199 with the option to buy more," Parsons said.

The lowered price point convinced Parsons to send out a round of about 200 e-mails to K-12 school districts throughout Indiana and parts of Kentucky. To his surprise, the offer resonated strongly with the school systems. About 12 potential customers expressed interest, which Parsons called a "good turnaround for an e-mail blast." He's now beginning to turn those sales leads into bids.

NEXT: Finding the Money

Rick Black, director of marketing for Acer America, isn't surprised by the interest that school systems are showing toward netbook solutions.

"This part of the market has been evolving under the incredible budget scrutiny that schools are seeing," Black said. "IT administrators are being told that kids need PCs in the classroom in order to compete. Meanwhile, budgets are being cut in half."

Nevertheless, schools are finding ways around the budget crunch, finding state-funded grants to continue purchasing new solutions, Parsons said.

"Out of the people that I've talked to who want to buy between 30 and 200 netbooks, I think every one of them has applied for a grant," Parsons said. "That's where the schools are going to get the money for these machines."

For Sandy Flynn, vice president of marketing for Kennesaw, Ga.-based systems reseller BMC Solutions, using netbooks to get in the door of a school system is just the beginning of the opportunity. Flynn believes offering students the ultra portability of netbooks serves to expand the four walls of the classroom.

"[Netbooks] aren't just technology for the sake of technology," Flynn said. "They can become an integrated part of how a curriculum is delivered."

In addition to selling a school system on a movable cart that can wheel the systems from classroom to classroom, Flynn sees an entire set of managed services opportunities that that can include virtualization, storage and support.

"The managed services piece that we see includes monitoring the networks and devices," Flynn said. "We can drill into the system for support and provide a very strong, secure environment for a school system while managing the network remotely."

For Flynn, who resells Dell's Inspiron Mini 9 and Mini 12 systems, that means working in tandem with the Round Rock, Texas-based computer manufacturer and its partner, Stoneware, Carmel, Ind.

Stoneware touts its webNetwork offering as "private cloud" technology that enables customers to provide hosted applications via their own servers. The technology provides secure access to applications and data through a single Web interface, allowing students to access their school dashboard from any Internet-enabled device.

"We use Stoneware to deliver applications through the browser to end users in the school system," Flynn said. "Within that school are virtualized servers working in coordination with SANs, which lets us monitor both the networks and devices. That doesn't mean we necessarily have feet in the street, but we are getting notices before a server goes down. That lets us be proactive vs. reactive."

NEXT: Gung Ho For Government Gung Ho For Government

Government agencies are another avenue for channel partners to land netbook deals. Channel partners report that the military in particular has provided at least a few opportunities for netbook sales, driven primarily by the need for mobility.

Darrell Bradshaw, marketing manager for Phoenix-based Transource, a government-focused systems reseller, has seen success in selling netbooks to the military and government agencies, as well as "a few" federal customers that have requested information on netbooks.

For Transource and Bradshaw, selling netbooks to government agencies is similar to baiting a hook and tossing it in a pond, hoping that a wide-mouth will rise and take the bait. Netbooks aren't necessarily a standard part of a pitch that Transource assembles before sending information out to potential customers. Instead, the channel partner waits for a specific type of request.

"The Department of Defense has shown interest in netbooks," Bradshaw said. "Sometimes it is through a pitch we put together and sometimes they approach us. But if we see a lower-end notebook request, we tend to throw a netbook in the package we assemble."

The netbooks that are included in a product pitch tend to draw attention in part because of their low weight and small size. While the military customers he's worked with tend to be tight-lipped about their intentions, Bradshaw speculates that the interest in netbooks is probably based around the battery life the systems get as well as the mobility that they offer.

"We put one pitch together and eventually sent some netbooks out to White Sands Missile Range," Bradshaw said. "The mobility gets them. Sometimes it is the battery life and sometimes the customer has an application in mind that they'll eventually end up running."

Both Bradshaw and Portable One's Darling see their relationships with vendors as evolving. Both men note that the netbook space has been so new to them that neither is sure exactly what kind of support they'll need or how the vendor relationships will grow as they work with them to target government sales opportunities.

"I haven't had much need for support yet," Bradshaw said. "Asus has been good to me in the past and MSI has been decent. But because netbooks are so new, I haven't really had the need to establish a relationship yet. You really don't think about that until it starts piling up on you."

NEXT: The Mobile Employee

The Mobile Employee

Some of the most compelling reasons for netbooks to be adopted by general business users are their ultra mobility and lower price tag. It seems like that would make it a slam-dunk for channel partners to sell these slimmed-down notebooks to companies that have a large mobile workforce. Yet, somewhat perplexingly, that is a market that channel partners see as the least developed and least well-defined -- but that doesn't mean that channel partners don't see an opportunity for growth.

In fact, the argument for SMBs purchasing and using netbooks is best articulated by the channel partners who are primed to jump at the opportunity.

"Anyone who needs to be mobile should have a netbook," Darling said. "They are made for the travelling professional and frequent air traveler."

Transource's Bradshaw recognizes that netbooks are steadily gaining more momentum, but still haven't reached a point where the SMB customer is ready to purchase them through the channel.

"If the netbook market ramps up and interest keeps building, there's a good chance it could turn into a profitable part of the business," Bradshaw said.

Automated Solutions' Parsons, however, is taking more of a conservative approach to the netbook market. Parsons acknowledges that netbooks cater to a certain type of user but has reservations about whether or not tiny devices will be attractive to SMB customers.

"I have to question whether or not a $300 or $400 laptop would hold up under heavy business use," Parsons said.

But data from market research company NPD Group shows that sales of netbooks -- which the research group defines as clamshell computers with a screen size 10.2 inches or smaller -- increased 66 percent through distributors in the fourth calendar quarter of 2008 when compared to the third quarter. DMRs such as CDW and Insight saw an increase in sales of 50 percent over the same timeframe, NPD said.

Netbooks, then, are selling through the channel, though in some cases VARs say it is difficult to discern whether those systems are being used for business or personal use.

"I see VIP customers, small-business owners and some corporate leads come back to purchase [one-off] netbooks. But those customers don't specify if they're buying for business or personal use," Darling said.

What is clear, however, is that the market for netbooks is growing, and the technology is evolving. Vendors are aware that channel partners are beginning to see success in a segment that was practically nonexistent just one year ago.

For the moment, solution providers that are early adopters of this confluence of technology and opportunity are still waiting to see exactly where the solution will fit. While netbooks haven't taken hold of a particular industry yet, channel partners can see that these ultraportable systems form the foundation of solutions that can wear many hats. And it is precisely that versatility that will make netbooks a powerful solution for the channel to sell.