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Hot High Margin Opportunities

01 Oct 2006

Do you find yourself remembering the good old days when you could earn 30 points on a laptop ? While many products have been affected by commoditisation opportunities still exist to make decent margin. This month The Channel looks at some of them. * MYOBNaturally a strong brand is an easier sell than an unknown and MYOB accounts for over 80% of all new sales of business software products to SMEs through the reseller channel.  Peter Bramley, MYOB general manager, says the brand – combined with 72% mindshare – translates into definite sales. “Resellers should jump on MYOB’s coat-tails because it’s certainly a door opener. Partners are critical to its success as they directly interface with the client but many don’t fully appreciate the role they can play,” he says.“Quite a few resellers still see themselves as just sellers of hardware but they need to take on more of a consulting role and assess the needs of a customer’s business and offer them a tailored solution.” Bramley points out that by adding value through implementation and consulting partners have a powerful tool that can make a real difference to their customers. He says MYOB is passionate about supporting small businesses and works consistently to make life easier for owners. “Small businesses are the heart of the New Zealand economy and MYOB wants to help lift the load. Customers can be bamboozled by IT – which is meant to make doing business easier.” Bramley says his company is focused on delivering good margins to resellers to reflect their commitment.“A key driver for MYOB is to grow with a business through its lifetime and is working very hard to provide solutions across the board to achieve that.” * KingstonWhile memory is undoubtedly a commodity item that doesn’t mean there aren’t high margin opportunities. Vaughan Nankivell, Kingston product manager at Ingram Micro, says resellers typically regard Kingston memory as an upgrade choice for desktops and notebooks. However he’s keen for resellers to recognise Kingston has world leading expertise in system-specific server memory. “While Kingston is certainly prevalent in the desktop and laptop market it has a strong focus on the high performance server side – that’s initially where the company developed its expertise,” he says. Not only is Kingston the most reliable product, he says, but it also has free technical support,  free lifetime warranty  and is guaranteed 100% compatible. Reliability is one of Kingston’s core philosophies and the company take numerous steps throughout the assembly process to eliminate causes of memory failure. Nankivell believes there is a common misconception that Kingston doesn’t manufacture its own product but that’s not the case. While many other memory module companies use a generic module for a variety of systems, Kingston manufactures system specific memory which means the design is customised to meet the requirements of the system it’s designed for. In fact, says Nankivell, he often finds his products competing against vendors that have OEM arrangements with Kingston. “What resellers should remember is that Kingston is a product they can trust and be comfortable with.”Additionally, because Kingston products tend to be cheaper than similar products by other manufacturers,  Nankivell says resellers can make more margin.Anyone wanting to know more about Kingston’s manufacturing process can visit* HPDarren Kelly, commercial desktop product marketing manager, says HPs partnership with Microsoft has been a powerful sales driver. He says the partnership makes it easier to sell selected HP PC products by adding Microsoft Office 2003 software.“Now resellers can easily bundle this software suite to any HP business desktop, notebook or workstation,” he says. The benefits of this include competitive price points, a reduced number of SKUs and inventory management by partners and a strong brand image through the HP/Microsoft partnership. There’s also the added bonus of providing a one stop shop for an integrated experience, he says. HP offers three Microsoft Office SKU’s; Basic edition, Small Business edition and Professional edition. Kelly believes resellers are aware of the importance of attach selling and generally never sell a naked box. “It’s all about improving performance, whether that’s through increased memory or the right application software.”Meanwhile Simon Molloy, market development manager commercial notebooks and handhelds, says there is huge interest from SME customers in HP notebooks. “With the demand already there resellers can focus on improving the mobile experience for customers. They should look at batteries, docking stations or TFT monitors to build the value of the total sale,” he says. Molloy does encourage partners to offer HPs care pack warranty which he says generates great revenue and is a fantastic value-add. He says it’s also important to offer interest-free financing to business customers, possible through HP Smart Finance. Molloy says that while the majority of customers understand desktop there are far more questions when it comes to a notebook purchase. “Customers tend to have a particular requirement when purchasing a notebook - for instance they may just want the lightest model – and HP is working to deliver more collateral to the channel so partners can deliver the right solution for the customer.” He notes that while customers may spend some time haggling over the price of a notebook, they tend not to quibble the cost of attach products. However at the moment HP is running a free docking-station promotion on its nx6320, nx7400 and nx9420 ranges, targeted at SME customers. * MicrosoftWhen it comes to achieving high margin sales Microsoft prefers its resellers to concentrate on a scenario sell. Brigitte Reed, HRD product manager, says the best method of attach selling is to think about what the customer is using their hardware for. “If a person is buying a laptop because they spend a lot of time on the road then they might need a presentation device or, if they have a family, a webcam so they can say goodnight to their children,” she says. Reed says Microsoft’s peripherals range is designed to seamlessly add value to the PC experience.While the retail channel focuses on product features and benefits Reed says messaging for the breadth channel – resellers serviced through Ingram Micro – is focused on ergonomic solutions. Reed met with a large number of resellers at Ingram Micro’s Showcase event in August and says the majority were extremely interested in LifeCams. Not only are LifeCams a genuine value-add product, says Reed, but are expected to undergo 30% year on year growth over the next few years.  “Globally there are more than 250 million Windows Live Messenger users. More importantly there are around 700,000 users in New Zealand so the opportunity is definitely there.” Additionally Reed says LifeCams are ideal for companies with regional offices for conducting team meetings. * Check Point softwareThe real money is in emerging technologies according to Scott McKinnel, Check Point ANZ country manager. “Perimeter-based security has become more commoditised which tends to happen as market awareness grows. It means the sales cycle is diminished and products don’t achieve the same high yield,” he says.McKinnel says partners serious about achieving high margins should look to add value wherever possible. “Adding value sounds like boring marketing speak but it’s actually true. Resellers shouldn’t go into meetings with a pre-agenda because when you’re looking to engage you need to focus on building trust and rapport rather than speeds and feeds.” Much like insurance McKinnel says security is always a reluctant purchase and requires a different sales approach than selling  other technology.“You have to focus on compliance and risk management to effectively sell security,” he says.For resellers who want to enter the security market McKinnel recommends they do as much research as possible. “Find out what customers are looking for and once you understand that then make an informed decision. UTM has really lowered the entry barriers for resellers but they still need to invest in one or two resources. “Check Point distributor Lan Systems has been in the New Zealand market since April and is delighted with its success so far.Leigh Howard, national sales manager, says having an a sole distribution relationship with Check Point allows Lan Systems to work closely with the channel. “I’m delighted with the way the channel has warmed to us. Along with maintaining existing partners we’re now looking at growing Check Point’s partner base,” he says.Howard says Check Point’s mid-tier offering is driving a lot of activity and believes the company’s new partner programme will add a lot more value to the proposition.

* NutechAnd while you’re off investigating new opportunities don’t forget about the old faithfuls. Nigel Willard, Nutech sales and marketing manager, says there is still good margins to be had in paper, inks and other consumables. He says dealers should definitely look at re manufactured products to increase margin.“There’s also a growing market for photo paper as people are now printing more photos at home,” he says.While there are a number of strong brands in this area Willard says Kodak remains the best seller and is a brand most consumers are acquainted with for paper.