Solution Providers CXtec, Teracai: Diversify and Double Down

In mid-August, CXtec and Teracai confirmed Peter Belyea as president of the two companies, a newly created position. Founder and CEO William Pomeroy isn't moving on; rather, his focus will more toward long term vision, Belyea told CRN.

"Bill's role is that he never sees himself as not being connected to the company, but he wants to step more away from daily operations and work with the board of directors," Belyea explained. "We see this as an opportunity for our companies to go out and make the best of strategic opportunities."

Belyea, a 23-year veteran of the companies, came to CABLExpress Corp. as a division manager of emerging markets in 1988, and became a vice president in 1994. In 2000, Belyea shifted to what was later named CXtec as vice president, sales and marketing, and then, starting in 2007, headed up responsibility of what had become the CABLExpress division of CXtec.

Another shift came in 2009 as CXtec spun off its Cisco-centric reseller business as Teracai, though Belyea returned to heading CABLExpress in 2010 after a year running Teracai.

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Both CXtec and Teracai -- respectively Nos. 252 and 381 on this year's VAR500 ranking -- have held steady through economic headwinds, exiting 2010 with $61.7 million in revenue for the former and $36.2 million in revenue for the latter, according to sales data provided to CRN. Between the two, Teracai was the big gainer from 2009, having grown from the $25.5 million in revenue it posted the year earlier.

Both companies are in hiring mode, Belyea said, looking to add sales and channel managers. To hear Belyea and his team tell it, in fact, many of the moves now happening behind the scenes at CXtec and Teracai are being made to stand out from the channel pack.

One of CXtec's jewels, for example, is LIFECYCLExpress, its e-waste and IT asset recycling and disposal business. CXtec is in the process of certifying under R2/RIOS, a pair of standards -- Responsible Recycling and Recycling Industry Operating Standard, respectively -- developed for the electronics recycling industry to provide credibility for programs like CXtec's.

That's hugely important, noted Frank Kobuszewski, vice president of the technology solutions group at CXtec, as government customers take a closer look at IT asset disposal and the companies that perform those jobs.

"They want folks who are serious about compliance and making sure that the rules are followed," Kobuszewski said.

Part of CXtec's recycling operation is a 12,000 square foot facility that includes industrial shredders for disposing of hard drives by cutting them to three-quarter-inch strips -- a tighter cut, Kobuszewski notes, than the industry-standard 1 to 1.5 inches.

"A lot of people wouldn't be investing now in the square footage of recycling facilities but we're pushing this forward," added Belyea.

CXtec also recently expanded its standard lifetime warranty to include all voice and networking equipment under equal2new -- the brand CXtec established in 1995 to sell refurbished gear from Cisco, HP, Nortel, 3Com, Avaya, Mitel and other vendors.

That warranty, noted Kobuszewski, includes first year advance replacement on all that gear, as well.

The Teracai business is the more traditional solution provider, and specifically a reseller and integrator specializing in Cisco products. Teracai's Cisco product business, which accounts for about 80 percent of its business overall, is up 10 percent year-over-year in 2011.

Kevin Cooke, senior market development manager for virtualization and data center, said Teracai has bet big behind Cisco's data center vision and its Unified Computing System (UCS) architecture.

"It's different than the way a lot of [customers] have always done it because it really is a different architecture and a different approach," Cooke said. "It's still Intel-socketed CPUs, but overall, Cisco aligns closer with how virtualization is being implemented."

Teracai views Cisco as leading edge for the convergence of networking and data center, especially behind products like the Nexus 1000v, Cisco's virtual data center switch, Cooke said.

With server virtualization well underway and storage and desktop virtualization piquing customer interest, the virtualization trend is headed inevitably toward broader networking virtualization, Cooke insisted, where many network services, from firewalls to VPN and load balancing, will run in a hypervisor.

"That's definitely the next wave," he said. "It's critical for us as a Cisco partner to get that right."