Edwardson: CDW Is An Enterprise-Class Provider

"We are the biggest storage reseller for HP," Edwardson said. "We are not a bunch of people pushing boxes. I, quite frankly, am glad of that perception. If you tell you the truth, other solution providers will be more afraid."

The fact remains, however, that storage solution providers believe they are helping drive this volume to CDW by evangelizing HP storage. Often, solution providers do all the leg work in designing an HP storage infrastructure only to have their customer prospects turn around and call CDW for a better price, said Don Richie, CEO of Sequel Data Systems, an Austin, Texas-based HP partner. HP requires solution providers to be certified and to have face-to-face sales capabilities, two requirements not enforced for CDW, Richie added.

The only value CDW brings to HP's enterprise storage sales is a way for purchasing to get rock-bottom prices, said Rich Baldwin, president and CEO of Nth Generation Computing, a San Diego-based HP storage partner.

Nth employs two engineers for every salesperson and has invested heavily in the ability to offer enterprise-class service to customers, Baldwin said. But he finds that more and more customers for whom his people designed storage infrastructures go to CDW to get better prices on enterprise-class products like the EVA array, forcing Nth to cut margins.

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Nth hosts events to draw prospects for HP storage solutions and sees customers who say they like what they saw but are buying from CDW, Baldwin said. "They may say they feel they owe it to me and will give me the deal if I match CDW's price. I ask what the CDW price is, and it would leave me 2 or 3 points of margin. It's not worth the risk of carrying the loan."

Ed Burke, director of advanced technology for the Americas for HP's Enterprise Channels group, said CDW has been enterprise-authorized for two years but he believes it has no unfair advantage.

Burke said singling out HP's relationship with CDW is not fair. "I would suggest [solution providers] would say the same things about CompuCom, Pomeroy or other big resellers. ... We have not seen any change in our street pricing because of CDW. It may be true in some cases, but you could substitute any other large commercial resellers. If the customer goes out and shops quotes, there will always be a lower price because other suppliers haven't invested the time."

Edwardson said many solution providers have the wrong perception about CDW.

The truth, said Edwardson, is that CDW is really a solution provider, one with a higher server volume than any direct marketer or VAR in the country. Vernon Hills, Ill.-based CDW, for instance, has worked with Sun Microsystems servers for more than one and a half years and sells eight-way IBM servers. "If you look at the enterprise in terms of how many of the Fortune 500 companies do business with us, you'll see we do business with over 80 percent of them," he said.

As to being the low-cost leader, Edwardson acknowledges that CDW's gross margins are the highest in the channel. But at the same time, the company does not always earn the best terms from vendors. "For instance, we are a Cisco Premier VAR, not a Silver or Gold level VAR," he said. "So we don't get as big a margin on Cisco deals as other vendors. How can we be hurting anyone?"