The Market Catches Up to D&H

While every vendor and distributor in the land races down to the small and midsize business market, D&H Distributing finds itself in an enviable position: already there.

The company has been funneling electronics hardware and software to resellers serving the market for most of its 87-year history, and, in its own words, has been doing it better than anyone.

“It’s funny to see everyone scrambling for this market now,” said Dan Schwab, D&H’s vice president of marketing. “Three or four years ago there wasn’t even an acronym for the market. Now everyone sees the enterprise sucking wind and they’re tripping over themselves to get to the SMB.”

“The market is very different [from the enterprise] and not everyone gets that,” he said. “It’s not enterprise-lite, and that’s the way so many see it. A lot of people think they are committed to the market, but they aren’t willing to develop the right products or understand the nuances of the market or even the resellers.”

Many vendors and distributors have approached the SMB as low-hanging fruit, peddling “dumbed-down” products to millions of SMB customers with programs that offer little support for resellers beyond call centers, Schwab said.

One of the surest signs most vendors and distributors don’t get the SMB is the simple definition, which is set by some companies as high as 1,500 employees, Schwab said. D&H draws the line at about 250 users, he said.

Microsoft, one vendor that gets the market, according to Schwab, defines the SMB market limit as 50 users and less. CA, Cisco, Intel and Symantec are a few of the others that get it, Schwab said, building appropriate products and partner programs.

D&H screens its manufacturers to ensure that it has products and channel programs that fit the market, Schwab said. Today the distributor carries only 86 vendors.

Microsoft’s chosen route to the SMB involves working with partners and the Web. Click here to read more.

The companies that get the market have developed products that deliver robust capabilities, often akin to enterprise levels of function, but simpler, with lower cost of ownership and support, he said. VARs in the space need to serve multiple clients quickly, and require simple systems that don’t necessitate advanced training or time-consuming deployments.

“They don’t have IT departments,” Schwab said. “Whatever you build cannot be overly complex.”

One misconception about the market, Schwab said, is that price points are key to sales.

“It’s all about business value in the SMB, maybe even more than the enterprise,” he said. “They don’t have the ‘use it or lose it’ mentality each year with their budgets the way enterprises do. They spend what they need to, when they need to. If you can make the case to the CEO of a construction company that ‘you’re losing money to replace 11 notebook [computers] every year, why don’t you consider the Panasonic Toughbook,’ that’s one you can win.”

From distributors, VARs need a little more hand holding, Schwab said.

“It can be labor-intensive,” he said. “We are a conduit of information for them. We help them work through the solutions. For an eight-person VAR that just won a bid, they don’t have the time to crawl through 50 vendor Web sites. The typical call we get might be,’We just won this bid, what do you recommend?'”

In April, D&H made arrangements with seven manufacturers for integrated security solutions, as many resellers demanded more sophisticated solutions, and made a similar announcement in the networking arena earlier in 2006.

D&H also expects its ability to source consumer electronics to provide an advantage as convergence and new solutions bring those products, including LCD displays and media equipment, into the workplace.