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Pat Maley


Client Systems

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Ron Seybold, Editor In Chief


Consolidating HP 3000 Flight Traffic

Pat Maley has a habit of making change take off. The CEO of Denver-based Client Systems has led his company to a hub position on the HP 3000 distribution route. The company developed and promoted its new Web site as a meeting place for HP 3000 colleagues around the world, adding chat and messaging services and consolidating information about the system. It’s typical of the vast changes Client Systems has made in its dedication to the HP 3000 over the past 18 months, starting with its 1998 decision to focus solely on the HP 3000.

That year the company dropped its authorizations to distribute HP Netservers and HP 9000 systems to its 50-plus authorized HP resellers, and began to curtail reseller operations in the Oracle market. In place of that, the company which was once the only distributor of 3000s to North American resellers began aiming at an exclusive status once more. It created its Web-based forum at the same time it launched Phoenix 3000, the first HP-authorized channel for used HP 3000s. The company attained its goal in August, when HP finished its Channel 2000 project for the HP 3000 and named Client Systems as the sole distribution source of HP 3000s sold through the North American authorized channel.

Maley has been in the cockpit for this quick climb to top 3000 distributor partner. A former P3 Navy pilot who trained aviators, Maley landed in the HP 3000 community five years ago after more than 15 years of sales and general management sorties at Sequent and Intel. At Sequent he sometimes tried to sell against HP’s 3000 offerings, with infrequent success. His Intel experience let him sell to HP at a time when Intel and HP were in competition. Maley then consulted in the Chasm Group with computer marketing guru and author of “Inside the Tornado” Geoffrey Moore. Following his term in the consulting business, Maley joined Client Systems in 1994, the year HP authorized a second 3000 distributor for North America. Maley invited Moore onto the Client Systems board in 1996, and three years later the company earned back its sole distributor status. With online, Phoenix changing the used 3000 market with an authorized used channel, and Client Systems now the source for three out of every four new HP 3000s sold in North America, Maley and company qualify as one of the brighter stars shooting through the HP 3000’s summer sky. We asked him just before HP World what qualifies his company for so much of HP’s 3000 attention, and how he thought his flight plans might help pilot the system at the center of his business.

What were your business justifications for embracing what some think of as a legacy platform?

At the time, about half of our revenue was from the HP 3000 and about half was from Oracle. [The 3000 General Manager] Harry Sterling said, “Pat, you’ve got to get off the fence and decide which place you’re going to invest in.” We looked at it over a two-month period and brought Geoff Moore in to consult with us about what we should do. We all came to the conclusion that the right thing to do was to invest in the 3000.

Our justifications were fairly simple. To be a successful business, you want to be a big fish in a small pond. We were a very small fish in a very large lake, and there wasn’t going to be very much we could do to affect that. We just changed the playing field to a pond we could be a major player in. If we invested in this [3000] business, it would distinguish us from the others who weren’t doing that. We went away from the normal distributor model: I invest in my business, and I don’t invest in your [vendor] business. We took the view that by investing we could really extend the product life cycle of the HP 3000.

One of your directors is Geoffrey Moore. What does his Main Street strategy have to do with the HP 3000? Have you seen him modify his thinking since he’s been more closely involved with an all-3000 business?

On Main Street, you’re trying to minimize your investment in your existing systems that work and run your business well. You want to add new pieces of technology to that investment, incrementally, that help you be more efficient and cost effective.

HP is now making the investments to add the technology to MPE. On Main Street, if the cost to change is large compared to the cost to maintain, people will mostly maintain. [Geoff] has gotten a deeper understanding of this part of the market. The reason is that the Internet changed everything. Until the Internet, in high-tech we developed a product and ran it through the tornado — and when it got on Main Street, companies killed their own products when the volumes slowed down.

When you’re connected to the Internet it doesn’t matter what technology you’re using. Nobody cares. And we all realized with the Internet we had a tremendous ability to use the data we’d accumulated over the years.

HP likes to say its 3000 customers don’t care if the platform itself gets visibility these days. What’s the relative worth of people knowing a successful solution is powered by an HP 3000? Will you market the platform in advertising opportunities?

That’s part of what we’re going to be able to do with our new [sole distributor] arrangement. Of all the companies still very involved in the 3000, including HP, a major advertising campaign requires more money than any one entity has alone. If you had a community doing the advertising, you could get a lot more done. This is one of the premises behind

It’s important the 3000 be identifiable in the selling process, so it’s not a big question mark. I also think you’re going to see the definition of “open” change. I did this for 10 years at Sequent, saying Unix is open. Well, we all know that Solaris is different than AIX, which is different from HP-UX. And then there’s NT, which people say is open, but you can only buy from one company. In my definition today, open is that you’re Internet-enabled.

What good will come from being named the only 3000 distributor for all of North America’s HP 3000s sold through resellers?

This is no longer a distributor-manufacturer relationship. This is a true partnership. HP is fully committed to us, and we’re fully committed. It’s like that story of an egg-and-bacon breakfast: the chicken is involved, but the pig is committed.

Being in partnership with a large company leads to a lot of following from the smaller company. Can you really have disagreements and push back at HP’s policies about the 3000?

Absolutely. I believe we will have differences of opinion and we’ll work it out, because we’ve already done it. Part of the reason we’re here today is because HP knows they can do that with us.

Some of the companies we’ve just begun to do business with were concerned that we didn’t have any competition anymore. We have major competition. Our competition is migration, like when a major application ISV says they’re not going to support the 3000 anymore. When an end-user says they’re going to migrate away from the 3000, that’s competition. Everything that we’re doing to build value into what we do has to be aimed at that competition.

How are things going to get better with only one distributor to serve North America?

The supply chain side between us and HP is going to get much stronger, with things oriented toward increased throughput and lowered costs for better service to customers. In the past, it was difficult for us to get the full leverage of what we were doing for HP on the marketing side. HP was faced with two different business models for distributors. We funded some significant infrastructure here to be ready if we won the Channel 2000 bid, infrastructure that at the time our old business model didn’t justify. We increased staff and investment in Phoenix and We have a lot more people in the demand generation end of the business.

We believe you have to invest and innovate, and that comes from the fact that we’re focused on this business. If we had other places where revenue would come from, you’d tend to minimize investments to balance your return. We don’t do that now. Companies willing to invest in this market will participate a lot more than those just looking for opportunity sales.

What have you noticed about companies heavily invested in 3000s versus those doing it as opportunity business with other product lines?

The ones who are much more invested in the 3000 are much better at doing their business. They have happier customers, and they know what they’re doing — it doesn’t all fall back on us. The model we’ll see in some of the larger resellers is ones who will invest and dedicate individuals to the 3000. This is a lot different than “every salesperson can sell the 3000.”

Do you expect that Phoenix 3000 can give your resellers price-competitive used offerings against brokers who don’t invest in the HP authorization infrastructure? Isn’t the Phoenix initiative as much a program for these 3000 resellers as it is for the customer base?

Yes — we expect we will be able to offer competitive pricing with Phoenix 3000 systems. It is a challenge, of course, to go through the authorized channel, as opposed to brokers who go from end user to end user and even trans-ship systems. We can compete, however, on price, quality, and availability.

Before this, the resellers just couldn’t service their customers with used 3000s. It will be a lot easier buying process for the customer. Phoenix 3000 is for end users, resellers and HP. Given the durability and capability of all versions of the HP 3000, Phoenix 3000 provides a quality alternative in price/performance to the new HP 3000 product line. It is not about competing with brokers as much as providing a complete suite of options for the end user customers through HP and its partners.

How do you think the 3000 market will handle coming out of the tunnel of safety the Year 2000 has provided?

It’s not going to be all that much different than it is today. If your business has major changes in it, you’ll look at other systems. If not, there’s not a reason to change. And once you’ve gotten Y2K compliance, you’ve made major investments, and you want to get a return on that.

We will see a fair amount of increase in supply in the previously-owned [3000] market, because of the availability of test systems that are no longer needed.

What will an online community Web site like do for customers and solution suppliers that they haven’t got on the Web now?

It becomes one spot to get all of the information you want, as opposed to sorting through the Web. We’re making major investments to make sure the major search engines have direct connects to

The other piece is the interactive. We’ll see this very intense interaction for a week at HP World, but then it goes away. There are a large majority of the users who don’t participate in this, and I think 3kworld is going to give them a way to jump in and do it. It will be easier to use, plus have multiple areas for applications as well as those focusing on MPE.

The Internet is moving the power from the providers to the consumers. is a place to give feedback to those providers.

It’s interesting that you’d say this Web site is going to shift the power away from providers, since nearly all of the initial founders are providers. Why do they want to support this?

People are going to get a lot more information to make decisions than we typically get today. 3kworld is going to allow anybody who needs input to make a decision to get more than the squeaky wheels’ input.

What is it about the HP 3000 market that makes it a good match for a visible community point like

This market is a community of people who care about the 3000 and are loyal to it. They like to communicate, and they have a lot to communicate, and they’ve been very successful with the 3000.

In what ways do you believe you’ll be able to go beyond the simple sourcing duties that most distributors perform?

We are the opposite side of the “total solution.” When a product gets into Main Street, the users don’t want to spend an inordinate amount of time communicating to the manufacturer. The manufacturer is far enough away from the end users that unless they make an inordinate effort to communicate, it’s difficult. The role that we play is the link with the resellers and the end users to HP. Our focus on that makes us credible on both ends.

You worked in HP’s Unix market before focusing on the 3000. HP is drawing more of its Unix business into its direct channel, and pushing most 3000 business out to resellers. Why do you think HP has different goals for its channel in these two markets?

It’s because of their [relative] size. The good news about this is that we’re making major investments in the 3000, investments that are off HP’s balance sheet. That’s very different from the distribution model in the Unix market. HP is investing in the MPE operating system, and adding to the product — the right place for their investment. That means there’s no need for HP to make additional investment in some of the things that we’ve done. Phoenix is a great example of that, an investment we were able to make happen in months. Just over a year ago, 3kworld was a conversation I had with Geoff [Moore] that went “Pat, what are you doing with the Internet to help this business?” We needed to distinguish ourselves with these things. We’ve gone from being HP’s smallest [all server products] distributor to being the largest company in the world focused on the 3000.”


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