Direct vendors to go after servers

Direct vendors to go after servers

Vendors who have made a booming business selling personal computers directly to end users are now looking to use that same strategy to sell Intel-based servers.

US direct-sellers Gateway 2000 and Micron Electronics are rounding out their wares by buying server-technology companies Advanced Logic Research and NetFrame Systems, respectively. It seems they're following Dell Computer's lead, which has propelled itself to the No. 4 server slot within the past two years by selling Intel-based servers to customers through mail order and the World Wide Web.

There is a limit, however, to how well those vendors can penetrate the corporate enterprise, because supporting complex server systems requires a full-fledged support infrastructure, analysts said. "The direct model will work on low- and mid-range servers, [but] I question whether it will work on high-end, mid-range, and mainframe supercomputers," said Dataquest analyst Jerry Sheridan.

"As complexity of the computer system increases, people need more hand-holding in configuring, implementing, and upgrading their server installations," Sheridan said.

For now, the two companies will forge a hybrid selling model, with ALR and NetFrame maintaining their own service and support infrastructures.

Gateway and Micron will sell selected products directly, and under their own branding.

Gateway will offer some entry-level and mid-range servers in its product line, as ALR continues to use its reseller channel and integration partners to sell more highly configured packages, which now include desktops, according to Gene Lu, CEO of ALR, and now vice-president at Gateway.

"ALR will now be able to take advantage of Gateway's tremendous buying power, using economies of scale to drive down prices in its existing product lines, and offer deeper discounts to VARs," Lu said.

Micron and NetFrame will follow a similar approach, which will make both companies' product lines available over time through both the channel and directly from Micron's factory.

Both companies will lean on big-name consultants to support their largest enterprise customers with the most complex environments.

Micron's and Gateway's new acquisitions will bring them face to face with competitors such as Compaq, which has been evolving its distribution model in response to Dell's increasing market share.

Although Compaq relies heavily on its relationship with the reseller channel to service and support its products, executives have indicated that its customers are its first priority.

Compaq will put into place next month its Build to Order and Configure to Order plans, which endeavour to "touch the customer more frequently and more deeply", Fernander said.

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