Hardware sales landscape transforming, says Stone Group

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Systems builder and VAR tells ChannelBiz UK the channel should be more optimistic about hardware sales

There may be a fair amount of doom and gloom around hardware sales, but the channel can benefit from adapting its sales approach, according to systems builder and value added reseller Stone Group.

Daley Robinson, marketing director, told ChannelBiz UK there is a feeling in the channel that the best days of selling hardware are over.  With major PC vendors like Dell and Hewlett Packard seeing desktop and notebook revenues fall as they attempt to reposition themselves in the market, Robinson said that, to a degree, the channel is falling out of love with hardware sales.

“There is a movement out there for people in the channel, they feel commercially that hardware has had its day, but I think that the hardware landscape is just changing,” Robinson said.

However, he believes that by changing the way that devices are sold can lead to greater revenues.

“Fundamentally for us and end users it is not becoming device-centric, it is about building services around the device,” he said.   “It doesn’t matter if the device is a desktop PC, a tablet, or even a smartphone, there is still a hardware element to that. There is still very much a future is selling hardware, it has just got to be to make sure that the products are relevant to the market.”

Stone has been operating since its inception in 1991 as a systems builder for local education institutions.  It has since grown to generate £69 million in turnover last year, with a current headcount of 220 staff.   Although it now also supplies to the billion pound managed service providers in certain cases (who are looking for  flexible approaches that tier one vendors can’t provide), the business is very much oriented around its core services as a systems builder, though its reach has expanded to wider areas including central government and higher education facilities.

Concentrating on hardware sales, albeit with a greater emphasis on providing additional services, has continued to benefit the firm, Robinson said, despite purse strings being tightened, particularly in the public sector.

“We are looking at growth this year in an economy that is highly challenged,” he said.  “We are in a public sector market that has seen austerity cuts that have never been in this country, certainly not in this lifetime.”

He said that one of the reasons the company is faring well in hardware sales, is that Stone doesn’t have a “broad brush approach” of the bigger vendors and can provide a more consultative approach.

“What you find with the multinationals is that they tend to build the products and then go and sell it, whereas we work backwards from what the customer requirements are,” he said.

If a school has a problem with vandalism, for example, and they want a blanking plate instead of an optical drive and USB ports, then it’s possible to work backwards from that customer requirement and build them something bespoke from a hardware perspective.

From a system builder point of view, one of the keys in the market is being in tune to customer needs, rather than creating a product and and telling distributors and resellers to push it to customers.

“It is about looking at the organisation level,” Robinson said. “If you look at a local authority, it is not necessarily replacing desktop PCs with notebooks. When you actually get into the organisation and understand the drivers behind that, it is about space rationalisation.”

He said that by developing close relationships, understanding the customer and understanding the market, resellers can sometimes go in on a hardware level and end up selling the full solution piece.  This is particularly true with the growing interest in bring your own device (BYOD), and is being supported by the release of mobile devices supporting Windows 8, for example.

“When you get into those levels of discussion it is not just about hardware, you are able to introduce discussion around connectivity, getting 3G connectivity to the device, also talking to them about Citrix virtualisation infrastructures, security on the move,” Robinson said.

Although there may be changes in selling hardware, Robinson said that one element has stayed the same – highlighting the importance of a close relationship with its distributors, particularly in selling to highly seasonal markets.

“We enjoy a really close relationship with all the major players in the distribution space,” he said. “We have to because our business is very seasonal: we have spikes because every education institution want all their kit delivering in August.”

“It means that our production starts in the late spring early summer, so we have to make sure we have really strong relationships with all of our supply chain partners because the economy is challenging.

“That has enabled us to still be here today. If we didn’t have the depth of relationship with our distribution I don’t think we would be here,” Robinson said.


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