3COM at this price is a good buy. Much better upside potential vs downside risk. The earnings shortfall is about 30% and 3com had since then dropped close to 50% from its high. all imo.
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March 08, 1999, Issue: 832
Section: Small Business
Networking is growing -- Major Vendors Recognize
Resellers' Influence On Small Businesses
Herman Mehling
San Anselmo, Calif. -- As the small-business networking space grows in
spending power and market prominence, major networking vendors are
taking resellers more seriously. Little wonder. Resellers are the main
influencers on small businesses, and vendors know that intimately.
Networking surpassed desktops to become the single-largest spending
category for small businesses in 1998, according to the 1999 CRN Small
Business survey.
Networking hardware and software combined accounted for an average of
35.8 percent of total spending, up from 32.8 percent in 1997.
At the same time, the survey revealed that fewer small businesses fear a
recession now than they did six months ago-down to 24 percent this January
from 36 percent last September. The decline, reflective of the overall vitality of
the U.S. economy, bodes well for future IT spending by these companies.
So what do resellers want from networking vendors, and how do the vendors
stack up?
Resellers said their needs fall into four main areas: qualified leads, training,
quality products, and pre- and post-sale support. The best vendors to work
with are Intel Corp. and 3Com Corp., according to an informal sampling of
VARs.
The success of those vendors is rooted in two clear-cut strategies: creating
products the market wants and building effective support systems for VARs.
Easy-to-use, easy-to-install products, technical and marketing training and
qualified leads are "big deals" for the smaller VARs selling into the
small-business channel, said Tom Kilroy, director of worldwide sales for
Intel's reseller channel organization.
"As a vendor, you've got to proactively engage resellers by continuously
finding out what they want from your support and training services and
refreshing your services," said Jarek Chylinski, director of marketing, small
and midsize enterprises at 3Com, Santa Clara, Calif.
Intel, a relative newcomer to the networking space compared with 3Com,
focuses much of its channel efforts and marketing dollars on its certification
programs and training for resellers, said Kilroy.
"Imitation is the sincerest form of flattery," said Chylinski. "We've offered
certifications and training for years."
Superior training, support, the reliability of the products and the cache of the
brand name drew Innovative Network Systems to embrace Intel for its
networking needs, said Barry Loudermilk, president of the Atlanta-based
systems integrator.
"We used to sell 3Com gear exclusively, but the support was sporadic. So
when Intel started to be in our face all the time, we listened to what they had
to offer," he said.
Loudermilk seems slightly non-plussed and flattered by Intel's attentiveness as
his company only did a little more than $1 million in sales last year.
"Intel wants to win our business," he said. "It does a good job of promoting its
products. On occasion, Intel has sent us a site engineer to sit with us when we
configured an installation for a small business."
3Com makes reliable products for small business, its support is good, and its
prices are competitive, said Gibby Cohen, president of W.A.W., a reseller in
New York. "Even if its prices were not competitive, I'd sell the products
anyway, because they are so easy to use and so reliable."
3Com and Intel are both very aggressive with pricing, rebates and
promotions, and they both offer a lot of training options, said Jordan Scott,
director of sales at A & R Computer World Inc., a Brooklyn, N.Y.-based
VAR.
Still, Scott said he thinks Netgear-a business unit of Santa Clara, Calif.-based
Northern Telecom Ltd.-probably offers the lowest prices of any brand-name
vendor.
Netgear is trying to increase its presence in the small-business networking
market with its Powershift Partner Program, designed to strengthen ties with
VARs that build their own white boxes, said Stephen Dix, national sales
manager at Netgear.
It is a strategy grounded in reality. CRN survey data consistently shows that
white boxes are top sellers in the small-business market. In the third quarter of
1998, 35.6 percent of resellers surveyed in a CRN hardware poll said white
boxes were their best-selling units.
Through its program, Netgear plans to push sales of its networking equipment
within the system builder community and to establish Netgear as the brand
name of choice for these VARs, said Dix.
---
Small-Business Plans
- 3Com's easy-to-use, reliable products are a hit with some resellers.
- Intel focuses much of its channel efforts and marketing dollars on
certifications programs and training for resellers.
- Netgear is pushing its networking equipment within the system builder
community, hoping to establish itself as the brand name of choice there.
---
What Resellers Want:
- Smaller VARs selling into the small-business channel want easy-to-use and
easy-to-install products, technical and marketing training and qualified leads.
- Smaller VARs said the best vendors to work with are Intel and 3Com.
Copyright ® 1999 CMP Media Inc. |
