Technologies For Storage, Security Will Drive Growth

D&H Distributing's sales rose by a total of 27 percent over the third and fourth quarters of 2004, thanks in large part to increased focus on storage, digital imaging and networking solutions. The Harrisburg, Pa.-based distributor has never shied away from new technologies, and 2005 should be no different. Michael Schwab, vice president of purchasing, recently spoke with Distribution Editor Scott Campbell about what to expect from D&H this year. The following are excerpts from the conversation.

CRN: Do you expect this to be a strong year for solution providers?

Schwab: I'm optimistic for 2005. I equate it to plumbing. When you build a house, you work with a plumber who installs faucets. After that, there's no reason to call the plumber back unless something breaks. The computer industry was like that for a long time. Resellers didn't have to go back to existing customers. They were in break/fix mode. In the second half of 2004 and into 2005, we see there are a lot of new technologies that give the reseller a valid reason to talk to customers again about solutions to improve security [and meet] storage needs and productivity needs. Those are big wins for a reseller base today trying to evangelize new technologies and create new revenue streams for themselves.

CRN: Can you give some examples?

Schwab: There's been a broad deployment of wireless, and customers need to recognize the fact that if they're not investing in security, they've left their infrastructure open to security risks. I also see voice-over-IP as a technology once again to improve productivity and reduce costs.

CRN: VoIP can be a very complex solution, while D&H is known more for its components and peripherals. How do you plan to get into that space?

Schwab: It allows us to move up the food chain. [VoIP] technology was historically an enterprise technology that vendors are scaling to hit the SMB market. It's got the right feature set and more competitive pricing to be affordable to the SMB market. That also goes for intrusion detection, antivirus and firewall technology. I see more consumer vendors moving up the food chain and some enterprise vendors scaling down as well.

CRN: How do you plan to get more solution providers interested in new technologies?

Schwab: Clearly there will be a need to communicate out to resellers. We do that at various shows throughout the year, where we provide sales organization and marketing strategies.

CRN: Are you also trying to help solution providers move up the food chain? If so, what solutions are you driving?

Schwab: Let's say storage. In particular, storage management. There are HIPAA requirements in the medical vertical. In SOHO, there is MP3, MPEG4 and JPEG technology. Or in the 'prosumer' business, people do video capture and edit technology. Windows Media Center is driving the home market. For all those, you have the need to store and access all this information. That's accomplished by direct network attached storage products—NAS that is Ethernet-ready, so that you can keep adding additional capacity on the network. That's a great solution for the SMB market. Then the challenge is backing it up and securing the data. We've seen strong growth in what we're doing with CA [Computer Associates International] with the ARCserve product and the Dantz Retrospect product. [Dantz Development] was just acquired by EMC. It's a good business to be in.

CRN: What technologies are manufacturers most interested in bringing to the channel?

Schwab: The security area. That's where we get hit with a lot of new vendors' solicitations.

CRN: What do you look for when adding a vendor?

Schwab: It has to do with three things: First, do they provide good solutions today? But also, do they have the wherewithal to provide good solutions tomorrow? They can't be a one-hit-wonder vendor or product. The vendor has [to have] a track record or say that this is step one of five generations of product on the road map. Second is their commitment to the channel. Does their go-to-market strategy support the reseller channel so that it doesn't jeopardize the product? Third, does the technology justify the endeavor to inventory stock and train our salespeople and make a commitment to the vendor?