Queensland-born network hardware vendor SnapGear has announced it will cut out distributors and deal directly with resellers in a bold new move to sell at aggressive prices.
SnapGear creates hardware devices such as VPN routers. In May 2000, the company was acquired by embedded Linux vendor Lineo, but in mid-2001 the staff and management of SnapGear purchased 81 per cent of the company to spin out of Lineo and again become a standalone company.
"It suited all of us," said Miles Gillham, vice president of marketing for SnapGear. "Lineo decided they had to focus on non-hardware solutions as they sometimes were competing with their own customers, companies that loaded Linux software onto various hardware."
Gillham said the company was given three months to survive on its own feet after spinning off, and aggressive pricing was the key to surviving on its own. In Europe, the company sold through the traditional two-tier channel model, and the company continues to sell through a mix of distributor and direct reseller relationships in the US.
But other than being a "pseudo-distributor" in ServerBits, a high-performance server distributor, Gillham said the company wants to deal directly with small systems integrators and value-added resellers in Australia. "We are looking at expanding our channel presence here and are waiting to see how this model will pan out," he said.
SnapGear will drop-ship its hardware products and provide support through its Brisbane office.
Gillham said the company's new VPN router with integrated modem has been designed and priced specifically for Australian conditions.
"It will suit small and medium businesses with branch offices or remote workers. It also has a broadband/narrowband fail-back option should, God forbid, your reliable DSL service drops out," he mused, referring to recent controversies over the reliability of Telstra's DSL service.
The product is also priced at several hundred dollars less than similar products from the likes of WatchGuard, SonicWALL, Netscreen and Cisco, Gillham said.
"We take most of the cream from the US so we can afford to take lower margins here," he said. "But we don't expect resellers to take lower margins -- they will be given quite attractive deals."