HP supply chain partner goes all-3000

Client Systems drops NT and Unix distribution
to focus on growing HP 3000 market

Companies like Client Systems (303.337.7300) form the second-tier supply chain for HP 3000 hardware in North America, configuring, testing and shipping the systems and peripherals which resellers then provide to 3000 customers. The company built a reputation as supplying the resources for Oracle resellers selling the full range of HP platforms. But changes in Oracle’s position toward resellers have edged Client Systems into a holding pattern on Oracle business, once the firm’s growth sector.

Client Systems not long ago earned authorization to sell HP 9000 and NetServer systems in addition to the 3000 units the company was founded on five years ago. While the firm may have won the authorization, getting significant business growth out of non-3000 systems didn’t fit with the company’s size.

The company is dropping its NT and Unix business in the new strategy. “We’re very much a niche player, not a traditional broad, product-line-card kind of distribution company,” said VP of Sales and Marketing Bud Michael. “You have to buy companies or be bought to become large enough to stay in those markets.”

The firm says its refocus is sparked by growth in sales of HP 3000 solutions through its resellers. “Increased demand for the HP 3000 has created the need for a dedicated supply-chain partner that focuses solely on these customers and solutions,” said the company’s CEO and president Pat Maley.

Michael pointed out that the market has been ready for the renaissance longer than HP.
“The world has been trying to tell HP for an awful long time that they just don’t want the 3000 to go away,” Michael said. “I don’t think the world has changed as much as HP has changed in their mindset. A number of things have been a catalyst around all of this, not the least of which is the deadline called the Year 2000.”

Michael said his company was at a crossroads in its mission to supply HP systems. “We could either go for an acquisition play and be part of the consolidation morass, increase the medallion value of having Oracle and HP with a longer term goal of being acquired by somebody big. Or we could get really concentrated in a business area that manifests itself in the 3000, and redefine the sandbox. We wanted to be the gorilla in a smaller sandbox.”

The changes at the company began with a new facility which the firm moved into in late May, a 10,000-square-foot building largely turned over to integration. The company is also making investments in training for HP 3000 resellers as well as end customers, bringing people who have a deep background in MPE up to date on the environment’s newest advances.

The distributor said its target markets – places where it works to generate demand for resellers – line up with HP’s niches for the 3000, including mail order, healthcare, airlines, manufacturing and credit unions. Client Systems said it hopes to help resellers solve business problems for companies which need transaction-driven solutions. HP 3000 division marketing chief Roy Breslawski said pushing this transaction capability is key to 3000 growth.

“Businesses based on transaction-driven applications rely on dependable, instant data access as the cornerstone of their success,” he said. “With its sole focus on the HP 3000, Client Systems will bring its customers complete, reliable solutions with the backing of HP’s proven service and support.”

A pledge to carry only HP products was once significant in HP’s second-tier channel. But competition between HP units has stepped up, and Michael said Client Systems wants to break some ground by becoming the only all-3000 distributor.

“Our contracts we got from HP this year were written to address a baseline of Unix system sales,” Michael said. “We had to contact HP and get them to rewrite the contract because we’ll only be selling 3000s. It never occurred to them that somebody wouldn’t want all of their products.”

Michael said that HP is making “significant investments and preparing pretty important announcements around the 3000 product line. We think the high technology buyers in computing in general are becoming a lot more pragmatic. Their information technology strategy has a lot more to do with just solving business problems. They’re no longer interested in investing millions of dollars [on the chance] that Unix or NT plays are going to work.”

Client Systems makes a case for pursuing what appears to be a smaller market than NT and Unix by identifying a bigger chance of making a sale. “From our standpoint it’s a lot less of risk predicting if someone’s going to buy [a 3000], because the market is established,” Michael said. “Buyer preferences are shifting in the market, and they’re not going to keep buying the latest technology unless you can show them a high incremental business value they can get out of it.”