FYI ALL: Channel Reseller News article re channel assembly.
NEWS
Concern Brews Over Assembly
By Scott Campbell
Memphis, Tenn.
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Major PC vendors and their channel assembly partners need to convince smaller VARs that the channel assembly bandwagon creates opportunities for their businesses.
That message came through loud and clear as a panel of resellers voiced their concerns about the channel assembly process at the opening of Ingram Micro Inc.'s 488,000-square-foot channel assembly center here last week.
Distributors and vendors must ensure cost savings will trickle down to resellers, educate end users about the benefits of channel assembly, and make certain that OEM products can compete with direct vendors and the white-box market, the panelists said.
Asif Hudani, president of Novaquest Infosystems Corp., Torrance, Calif., questioned the pace distributors and OEMs have taken so far in implementing channel assembly.
"It's taken three or four years of talking to get to this. That's a sad commentary on the entire industry. You look at cars, they have thousands of components, and they can do it. Right here, we have maybe a dozen components, and we look at it as a big challenge," Hudani said.
Judy Wilkey, vice president of product marketing at Dataflex Corp., Clearwater, Fla., said, "The end user still thinks it's business as usual. We need to get them excited about the ability to customize their units."
Ingram Micro invited resellers to its Memphis grand opening to address these concerns, said Ed Pensel, senior vice president of global configuration operations for the Santa Ana, Calif.-based distributor.
Winning VAR support is crucial and could be a major hurdle to vendors' channel assembly plans in the coming year, reseller executives said.
And in an informal survey of 329 resellers, members of ChannelWeb, an online publication affiliated with CRN, 55 percent said the promise of channel assembly does not persuade them to build fewer of their own systems, while 45 percent said it does.
IBM Corp., Compaq Computer Corp. and Hewlett-Packard Co. expect to have fewer than 10 channel assembly partners each eventually. For channel assembly to reach significant volumes, many channel-assembled machines must be built by distributors for their VAR customers.
Ingram Micro plans to assemble systems for five vendors by next month: IBM, Compaq, HP, Digital Equipment Corp. and Acer America Corp.
The distributor's goal is to have deliveries in end users' hands within 72 hours of placing an order with a reseller, said Jeff Rodek, worldwide chief operating officer at Ingram Micro. However, it could take one to two years to achieve that, he said.
"Hopefully, this will show resellers that we have the investment, the talent and the commitment," said Rodek. "But it won't be until they know we can produce every day, every unit, for them. They need to gain confidence in us. We know it's their business at risk."
Resellers said confidence is something they would like to have in Ingram Micro, but they need to see channel assembly in practice before being convinced.
"Until we can see an order at any point in time, it's not going to be successful," said Dataflex's Wilkey. "The opportunity is there, but communication is vital. If I'm going to take my configuration off-site to Memphis, I have to know that communication will be there."
Resellers also wondered about the effect channel assembly will have on the white-box market.
But Ingram Micro Chairman and Chief Executive Jerre Stead said the lack of channel assembly is what helped create the white-box market and, as channel assembly heats up, it will eat into that arena.
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