You don't have to be big to be No.1

You don't have to be big to be No.1

LAN Systems is not the largest distributor selling Cisco products. Compared to the sheer size and marketing muscle of Tech Pacific and Express Data, it could be easily overlooked.

Until, that is, you realise that it also happens to be Cisco's biggest reseller, beating both of these distribution heavyweights by a significant margin.

Managing director Scott Frew isn't concerned that the company appears small by comparison to its competition. He says that from the beginning the concept of LAN Systems was always to keep it very, very tight.

Frew himself has been in the networking distribution business since the early '80s, with such companies as New Zealand's Micro Networks.

When he started LAN Systems in December 1990 the company was distributing SMC's TigerSwitches and LAN2LAN products from Newport Systems, a company eventually swallowed by Cisco. Since that time LAN Systems has become a significant outlet for 3Com.

But it is with Cisco that LAN Systems has had its greatest success. He attributes much of it to LAN Systems being the only alternative to mainline distribution of Cisco product.

"We were pushing the Cisco story, and we knew what the products did, so we very rapidly became their number one distributor, and we intend to stay that way," said Frew. "And in fact we're growing faster than Cisco is growing at the moment - we've grown by a factor of six in six months."

Frew believes maintaining that level of knowledge of Cisco product is the key to remaining more successful than ED and Tech Pacific. "They don't know what the product is. There are 4000 Cisco line items in the price list, and the ED and Tech Pacific model is to employ young telemarketer-types. And they really don't know what the product is and how the product works.

"If you need help configuring routers, or you need to design a network, and a lot of the resellers don't have this internal expertise, then you need to come to someone like LAN Systems to get that assistance."

He says the company's real value comes when the reseller has a question to ask, such as; "what do you recommend for this particular installation? Or I want to buy Cisco, which particular product is best suited?"

For this reason Frew has no intention of dropping value-added services out of the distribution model, in the way Com Tech did with its metamorphosis into Express Data.

While acknowledging time-and-place distribution does have its place, there will always be resellers that require a greater degree of assistance.

"I don't agree with Com Tech's vision of the future, which is that value-add distribution doesn't work. I firmly believe that resellers in the most part can't afford presales resources to be trained up on every single network product. Just like they don't know about voice and data, they don't know about multimedia. They (Com Tech) say they can't survive in it but they made an awful lot of money out of it."

While LAN Systems' place as number one in Cisco distribution looks safe for now, what may tip the scales is Cisco's move to push more of its direct resellers into distribution. The possibility is that, as such, resellers are technically competent in Cisco products, they may lean towards time-and-place distribution.

Frew acknowledges that LAN Systems will need to provide time-and-place distribution services to compete for this business, and says he will match pricing with ED and Tech Pacific where possible. "We will, where we can, try to match the current buy breaks. LAN Systems will, to a certain extent, move into fulfilment, but it's still knowledge-based fulfilment."

Another way in which Frew has worked to differentiate LAN Systems from its competition is by offering a large number of add- on products around its core portfolio.

"For instance," says Frew, "if you want to sell a Cisco VLAN you need an Xpoint adapter which goes in your NetWare or NT server to support VLAN technology. So we're the distributors for that.

"We also carry LANcast, which is the Cisco recommended transceiver and translator company."

The company also distributes a number of software-based network utilities, from companies such as WebTrends, Castelle, e.g. software , and Podell Systems.

The reasoning is simple. "If we can increase our value of sale each time with these add-on products, then we've got to be better off than just focusing on how much this router is worth today."

Frew says he has no qualms about taking on these products early in their development cycle. "LAN Systems work at the growth curve. Tech Pacific and ED work at the commodity curve. We do carry Ethernet cards occasionally, we sell layer 3 switching; we'll get into multimedia, we do VLANs.

"But we move on to new technologies - we have to stay ahead of the game - because it's our knowledge that people are paying that extra money for, it's not just because we've got the product in stock."

LAN Systems

Tel(02) 9901 3655 Fax (02) 9906 2247


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