Catch the Changing VAR
By Stephen Lawton
Retrospectives are popular this
time of year. People like to get together, talk about the good times they
have had over the past year, reminisce about opportunities won and lost,
and sing Auld Lang Syne.
I like to reminisce too. For example, do you remember
back in the “old days” when buying a white-box system from a local systems
integrator got you at least as good of a system, if not better, than some
of the branded PCs, and for a whole lot less?
Today, the branded PCs have fallen well below
$1,000 for a basic system, while resellers are putting together very impressive
workstations at that price point. The issue for VARs is that the pricing
and functionality delta between the branded and non-branded systems is
Moreover, Compaq Computer Corp., Hewlett-Packard
Co., Apple Computer Inc., Gateway 2000 Inc. and other manufacturers now
sell directly over the Web, putting even greater pressure on the
As a result, the reseller market is changing.
Many of today’s successful VARs underscore the “value-added” portion of
their collective identity, and, increasingly, emphasize service, support
and vertical integration.
In some cases, this could mean the difference
between returning to the days of high profit margins and sticking with
low-margin products such as PCclones.
In other cases, it means that VARs are becoming
experts in networking infrastructure, adding software expertise with certified
engineers for Windows NT and NetWare and hardware expertise with network
designers familiar with such issues as wiring topologies and Layer 2/Layer
3 switching and routing.
Still other resellers are adding Web capabilities,
either partnering with or acquiring expertise in Web development, while
still others are taking a more support-oriented view by adding network
Whatever their choices, these VARs realize
that there still are margins to be made in helping small- to mid-sized
companies with their computing needs. The growth of small companies continues
at a significant rate.
Earlier this year, President Clinton sent
to Congress the latest edition of The State of Small Business: A Report
of the President. The report, which covered the calendar year of 1995,
stated in part: “The number of businesses filing tax returns grew to a
record 22.6 million. Proprietorship earnings increased 8.0 percent; corporate
earnings, 10.8 percent. The number of business bankruptcies and failures
declined, and industries dominated by small firms increased employment
at a rate 1.6 times the national rate of increase of 1.6 percent.”
Although those figures represent growth
from three years ago, small businesses continue to be one of the fastest
growing markets. In coming months, we will look more closely at the service
and support sector. I encourage you to turn to Page 29, where Deidra-Ann
Parrish helps you go “Looking for Mr. GoodVAR.” In future issues, we’ll
look at vendor certification for engineers, a look at some VARs who made
the change from selling boxes to vertical integration, and Y2K issues.