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January 1999
Modest vendors move new 3000s
Application suppliers expand 3000 installed base at low-end one customer at a time


While HP puts its 3000 muscle behind major vertical market solution suppliers, smaller vendors place the 3000 with customers who are far from the eyes of the 3000 division (CSY). The 3000 marketplace teems with small companies serving fewer than 100 customers. These lean firms sell HP 3000s and support them, too — with precious little involvement from HP.

The current marketing focus from CSY for new business designates a handful of vertical markets as worthy of attention: healthcare, credit unions, manufacturing and direct marketing. Each segment is dominated by one or two suppliers blessed by HP. Dozens of other software vendors don’t benefit from focused marketing, but sell HP 3000s anyway. Some say they couldn’t benefit from HP’s help, either.

Steve Smith is among those independents. Founder of Advanced Management Systems (AMS, 707.539.7990), he sells and supports a winery management package that runs only on HP 3000s. The 12-person firm counts 90 customers among active accounts, and counts on no help from HP to make his winemakers productive.

“I don’t even know the name of the HP sales rep in my area,” Smith said. “They don’t know me and I don’t know them. We buy all our machines used. We send software upgrades through the modems and never visit our clients, and we do everything for them.”

Industry specialization sells the AMS software running on those HP 3000s. “I’ve been doing this since 1981 and I know the wine industry in and out,” Smith said. “Our system addresses things very thoroughly, and handles things all the way from running vineyards to tracking product as it’s sold throughout the country.”

Smith’s application is sold in a marketplace where the alternative is PC applications, so his customers are extra sensitive to price. That means the list prices for new low-end HP 3000s won’t fly in his customer base.

“We have to stay competitive with the PC world,” he said. “As near as I can tell, HP has abandoned the low end of the market. You can buy an AS/400 for $8,000 that will perform about the same as a $22,000 HP 3000. I’m not going to pay 22 grand for a machine that makes it harder for me to sell software. I make my money on software, not hardware.”

AMS deals in used hardware for its client base, installing 917s and 927s that cost a third of the Series 918 list price. “I probably couldn’t sell my package in today’s market if I had to hook it up to a $22,000 minicomputer,” Smith said. “People would rather buy new, but we have a reputation in our industry of being the most well regarded software package for the industry.”

About 10 wineries are in the $100 million range in sales, “but it falls off pretty fast,” he said. “Wineries between $20 million and $100 million number about 40, but there are a thousand wineries in California alone, and most of them are two-person firms. We have the middle range of the market, producing from 10,000 cases a year to a million.”

For other software companies, HP’s sales message doesn’t include 3000 information in enough volume to be useful. Mel Rees runs CMT (425.391.9450), a 3000 application supplier that has served the garment industry since 1986. Rees is an HP channel partner and sells new HP 3000s, but uses little contact from HP in servicing his 12 active customers. A group more than three times that size use the CMT application, but aren’t active customers

Rees said he’s not using much support from HP in serving his clients.

“I don’t even have HP-installed systems anymore, because we do all the installations,” he said. “When we sell the systems they come with a year of HP support. But after that time the customers question why they’re getting a letter from HP asking them to continue their support. They never talk to HP.”

CMT’s customers range from large firms such as Old Navy and Bum Equipment to much smaller distributors selling garments to larger retailers.

“This is an industry that has been depressed for many years, so they’re not huge companies,” Rees said. “I have a person who uses our system on a timeshare basis who works out of her garage.”

“I’m not big. We’re not a sales-driven company. Almost all our business has been through word of mouth. I am frustrated at the level of support that comes from NT and Unix boxes. I keep falling back on the 3000.”

Rees said the 3000’s simplicity and supportability fit well in the segment of the garment distribution market he serves.

“They want to run their apparel business,” he said. “They’re not supposed to be in the business of doing data processing. I don’t even mention hardware on the first day. When we present the choices for systems, we sell 3000s. We only sell a couple a year, but that’s enough.”

Another class of small software vendor is working to grow, but isn’t mentioned in HP’s marketing efforts as one of CSY’s targeted vertical segments. CFS of Bellevue, Wash. (425.253.4776) sells project costing software for make-to-order manufacturing, using HP 3000s. CFS counts 20 active customers worldwide, including B.F. Goodrich’s Aerospace operations. Some of the CFS code is also inside the Summit Information Systems credit union package for back-office operations. The CFS package began its life as an application inside Boeing, and CFS took the software over after Boeing got out of the packaged application business.

Pat Thrapp has been a systems analyst at the firm since 1983, and says the company has been doing work on customers’ systems who have customized the package, to help them get ready for Year 2000. The next step is adding a graphical interface to the application, something made easier with new development tools. “Everybody wants GUI on the front end, and it’s pretty easy now with MiniSoft’s FrontMan,” he said.

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