D&H Pushes Green Technologies, Emerging Vendors To Channel

D&H Distributing enjoyed a particularly strong fiscal 2010, reporting nearly 20 percent revenue growth over what was a turbulent and unpredictable 12 months. But the SMB-focused distributor has been thriving in large part because D&H has walked a particularly fine line: the company doesn’t dilute its line card with scores of competing products and vendors and instead stays focused on its key partners. But at the same time, D&H has made a point over the years to find diamonds in the rough -- smaller, emerging vendors with compelling technology -- and make strategic bets on those gems.

Rob Eby, D&H’s vice president of purchasing, spoke with CRN at the distributor’s Mid-Atlantic Technology Show earlier this month in Hershey, Penn., and discussed some of his company’s recent initiatives, such as focusing on green technologies, emerging vendors and even smartphone technologies.

You have a ’Greenhouse’ aisle on the exhibit floor for green technologies. How did that get started?

We did it first on the West Coast (at D&H’s West Coast Technology Show) earlier this year and it was very, very successful for us. People were very interested in the technology and how they could save energy with it, whether it was SSD or a certain type of [power-efficient] hard drive. At the end of the show we actually gave away a [Vespa S 150 gas-saving model] scooter. Then we had another green initiative that ran through the back half of our fiscal year; every time a reseller bought a green product, which was labeled with green leaf, they would then get points to win a hybrid car. We did that in the U.S. and did a similar program in Canada with a scooter. And it was great. We saw the sale of green products skyrocket. It does seem like something that people are really interested in now, because not only are the products good for the environment but the technology saves them money on energy consumption and other things within the office space.

So from your perspective, do you feel like the technology is changing as a whole today and becoming greener?

Well, let’s talk about the processors that are coming out now. Even small businesses have server rooms today. So by using more energy efficient CPUs and hard drives as well, that lowers both the consumption of electricity and not only that, but the server rooms don’t get as hot. So you’re saving money on air conditioning and climate control costs, too. Now I think people are really becoming cognizant of the technology as a way to save a lot of money. And then you also have the recyclable packaging materials, too. More and more of our vendors are going to eco-friendly materials like recycled cardboard instead of plastic, and if they are still using plastic clam shells well then they’re using recycled plastics for that, too.

You also have an Emerging Technology aisle on the floor. What are some of the technologies or vendors that have sparked interest among your customers?

Well, I’m a big fan of PogoPlug and MyDitto. It’s that cloud technology that’s becoming the buzz word. And those two companies are in that space. For example, PogoPlug lets you set up your own home network and PogoPlug’s device sits there and it allows you to access all of your content and data. If you plug your hard drive into it, it becomes its own little virtual network out in the cloud and you can access that information through the Web.

And there’s something interesting about the mobile market happening right now. I read a study the other day that said 70 percent of time users spend on their iPhone is for data rather than voice. So for smartphones, the majority of the time you’re using it for data. And for regular cell phones, it’s the opposite and the percentages almost flip-flop. People want to feel connected constantly with their home software and data and all that content. And the same thing applies for small businesses; having something like PogoPlug would work there as well.

Next: Smartphones, Tablets And The Future Of Mobility

The smartphone market is huge right now, but a lot of resellers are unsure about how to approach. Do you think there is a viable business there for the channel?

I do. I think the misconception of the VAR is that they’re not going to be able to compete with AT&T or Verizon or T-Mobile. I think the VARs really need to think about themselves as the solution, not the phone. Don’t worry about the fact that you have to charge a little more for the phone than the carriers. Think of it this way: if you walk into a mall and go to the Verizon kiosk and buy a phone, they can probably get your e-mail set up for Comcast, but they have no idea how to get behind the firewall and allow you to access your corporate e-mail. That’s where the VAR, in my mind, can go to a small business and not only sell them notebooks but also provide networked smartphones and make sure they’re integrated securely and safely. I think that’s where the opportunity is. And I think VARs have gotten too focused on the price point of smartphones at retail. And I can understand that. Let’s say they’re going in with a Nokia E72; if they buy it from us, then they need to resell it for $399 but AT&T has deals for $99. But if the VAR can go in and sell the smartphone as a complete solution, then it’s a different story.

What about tablets? Is there a market there beyond a consumer device like the iPad?

I think what we’re going to see tablets from everybody. I think all the major vendors are going to have a touchpad tablet. Look at HP and who HP just bought. It makes a lot of sense because it put HP into the smartphone space with two really nice phones – the Pixi and the Prie – that were under-penetrated because Palm just wasn’t in a position to really advertise and do great things around those devices. Now you have a powerhouse with HP with that technology. And Palm had a tablet planned, but they never launched it. So I think it makes a lot of sense for HP.

Are we looking at a fundamental shift in personal computing with the size of devices getting small and smaller with things like tablets and smartphones possible replacing notebooks? Or are people just going to have a slew of multiple devices?

I think people are going to have multiple devices. I think a lot of devices will continue to get smaller. But look at the netbook. I have one at home, but it’s not my primary computer. I have a traditional notebook. I’m a Blackberry guy. I love my Blackberry. But I still need my notebook. And then sometimes I use my netbook because I’m only gone for a day and carrying the netbook is easier.

What’s going to happen, then, with the overall mobile market? Netbook sales seem to be slowing and now tablets are picking up.

It will be interesting to see what happens there. We’ve already started to see a dip in netbook sales. Not notebook sales – they’re continuing to rise. But we have seen a slight dip in netbook sales, and I think if you look at how many iPads have been sold, that’s why. The price points aren’t that far off from a netbook. And that’s why I think a lot of notebook manufacturers are going to start producing slates and tablets.

Next: Video Conferencing, Storage And More

What are some other products and technologies that are in demand?

Notebook and netbooks are still very big categories. And I think they’ll continue to be big. Another area that’s big for us is storage. It’s huge. We’ve got a new vendor called IoSafe that makes a hard drive that’s fireproof and waterproof. You can do almost anything to this product -- spray it with fire hoses, run it over with a bulldozer, set it on fire -- and the hard drive still works. And it makes a lot of sense for a small business that wants to protect its data.

What about virtualization?

For the resellers we work with, it’s probably a little early for them to get into virtualization. The wheelhouse for them is a 10-seat small business like a doctor’s office or a lawyer’s office. So virtualization doesn’t mean anything to them yet. But I think as the market expands, we’re absolutely going to have to be in that space and help our customers.

Have you seen growing interest in video technologies, particularly video conferencing?

Yes. The economy is definitely turning around, but people have realized the expenditure of travel is so big, especially for reasons aren't always necessary. Sometimes we’re much more productive using video conferencing. We’re absolutely focused on that space and we’re looking for new vendors. We do a lot with Cisco’s products; Cisco in general has been growing for us very rapidly, but their video conferencing products had been growing quickly, too. And people are amazed at the technology and how there’s a big difference between now and even two or three years ago in terms of the video quality. We have a new vendor here called FaceVision. They have HD Web cams that work over Skype. And there are a lot of international companies that I deal with that don’t use the phone to communicate with others countries -- they use Skype. So it’s a cool product.

Has your line card grown over the last year or so?

Yes. As the business has grown, the number of our vendor partners has grown, too. But what we are trying to do is have vendors in each space that can be cohesive so that we can really drive the business. We’re not looking for our vendor partners to compete with one another. Do we have vendors that compete within our line card? Sure. But we try to limit that to a couple in each space. When it comes to line cards, we've never been the phone book. Some of our competitors are like the phone book, but we’re not. We really pick our partners carefully and smartly based on the business model. And sometimes we’re a little like Ellis Island. There are a lot of really small vendors out there that never given an opportunity from other distributors, and we give them that opportunity. And maybe they only have one SKU – PogoPlug is the perfect example, with only one SKU – but we give those guys a shot to reach a larger customer base.

Along with the Greenhouse and Emerging Technology aisles, you also have a Microsoft Office 2010 promotion, ’Win An Office Makeover,’ for VARs selling the new suite. Will Office 2010 to be a significant driver this year?

I think so, yes. I think the Office 2010 upgrade is really going to make a difference. I think people are excited about it because they want to see that change in Office from the previous version. Everyone knows how Windows Vista went over, so we don’t need to comment much on that, but Windows 7 came out and it’s actually a really good product. I think Office 2010 will do the same thing for people that struggled with Office 2007.