Menu
Unstoppable power sales

Unstoppable power sales

Unstoppable power sales

Confusion and paranoia are set to reign as the new millennium approaches, and the last thing on executives' minds is unnecessary technology expenditure. But as David Binning writes, there is one thing of which they will spare no expense in the critical weeks ahead: uninterruptible power supplyWith the next century just weeks away from delivering its verdict on several hundred billion dollars worth of date fixing, the worlds of business and government are now more than ever mindful of their dependence on technology to even function.

This is great news for those resellers getting into the areas of disaster recovery or prevention technology.

The predicted slowdown in technology expenditure is already eating into the Y2K-bloated budgets of major technology companies, with many, including IBM and Compaq, having reported downturns.

Those companies in the business of uninterruptible power supply (UPS), however, are unlikely to see a waning of demand any time soon.

The UPS market has seen a great two years in Australia and is one of the few areas feeling a surge in demand, partly as a result of predicted Y2K problems as well as overall increased awareness of disaster and recovery issues.

A whole swag of factors have contributed to this situation, not least of which has been the inconvenience to business and the community resulting from several major power outages. They have always occurred, but with so many people now reliant on computers the impact of even the slightest brownout could make a dent in the balance sheet.

Power failures are now ranked third behind dropping and theft as the main problems for PC users. Translated, power surges now account for roughly 24 per cent of all PC losses.

According to a 1997 study by Safeway Supermarkets in the US, more than 1.5 million laptops and PCs were damaged due to power outages in 1997.

Then there's the deregulation of power across Australia which many people claim has contributed to a lowering of power quality in certain states, especially Victoria.

Some UPS vendors have denied this is the case although none would argue they haven't benefited from the perception.

After the Auckland power blackout early last year Brisbane suffered a similar meltdown; this year Sydney and Adelaide were the latest victims.

`These outages generated enormous interest in our products,' said Leanne Cunnold, managing director of US-based power protection giant American Power Conversion.

`Most spikes in demand coincide with power failures.'

But the biggest opportunity cited by vendors and resellers is the burgeoning low end of the market driven by the growth in PC users and Internet surfers looking to minimise connection dropouts and other nuisances.

`People never used to have power protection on their PCs,' said Cunnold.

But this is changing quickly. `The UPS is starting to settle as an add-on to a PC sale.'

But resellers obviously need more than the promise of the occasional major disaster before they get into the UPS world.

The fact is that most will demand access to good training and education before taking on UPS in any serious degree, according to Hugh Evans, managing director of Australia's oldest power protection company, Sola.

Evans said that the market has been very strong this year, especially in the lower end, as more and more people seek better protection for their PCs, but that training would determine which companies had the greatest success.

`Training and education are crucial if you're to build worthwhile relationships in the channel.'

Even though the products are now easier to use, it's important that resellers and their custom-ers are shown how to set them up and use them properly.

`An important focus of the business is ensuring our resellers have enough information to sell the product.

`We train our resellers regularly and also have seminars from time to time.'

Sola is looking to compete more aggressively in the lower-end market, which Evans believes is poised for massive growth.

`It's a largely untapped area,' he said. Earlier this year, Sola released its Sola 305, a standby UPS for the SOHO market. According to Evans, sales have more than tripled expectations with 10,000 units going out the door already.

The acquisition by Invensys of US-based UPS manufacturer Best Power late last month is expected to have wide implications for the UPS industry internationally and particularly in Australia. Best Power is the parent company of Sola.

Sola's Evans declined to comment on any particulars of the agreement, citing non-disclosure agreements in the US.

However, many in Australia have predicted it will have a major impact here due to Sola's already considerable market base behind leader APC.

Evans would not comment as to whether he thought the new entity would be in a position to hurt APC.

Evans commented in August that there is a recognition at Best Power that the experiences of Australian and New Zealand companies are influencing the design and manufacture of power control devices throughout the world.

This is for a number of reasons. Violent storms common to much of Australia have spurred better innovations to ensure homes and businesses, especially in the Northern Territory and Queensland, are protected at this time of year.

`We always see a spike in demand leading up to Christmas in those areas,' he said.

More controversially, many believe that the deregulation of power has created a need for better power protection in Australia.

But Evans believes that the need for power protection is growing independently of any perceived loss of quality as a result of deregulation or any number of accompanying factors. In fact, he believes that in many cases where power problems create disruptions at companies, or even in the home, the user is often to blame.

`The need for power protection is growing independently of the quality of power. There's going to be a need for power protection regardless.

`It's very easy just to blame someone else but the need for protection by the applications that are proliferating in the computer industry are really driving this market.'

There has been a large increase in technology usage in the small and home office market which has created a need for UPS and other technologies guaranteeing reliability.

Better reliability

SOHO users now have the need for better reliability. Increasingly, computers are being used to store the small user's equivalent of mission-critical data.

Keith Orchison, chief executive of the Electricity Supply Association of Australia, said: `I don't think you will find any statistical evidence to support that contention. In fact, there are statistics to show reliability and quality of power has actually increased within both deregulated and regulated markets.'

There are special events such as fierce storms which impact adversely on overall statistics for power during a given year, Orchison added.

One such recent example was the Sydney hail storm, which created widespread power disruption to homes and businesses all over the city.

Claude Pelosi, Australian national marketing manager for US-based UPS giant Liebert, said that he expects to see a major storm in the local industry following the Best Power acquisition, with the greatest battles to be fought at the low end.

Like Sola, Liebert has been in the power pro-tection business for a long time. The company actually started in 1954 and built the first air conditioning systems for the world's earliest computers.

The company's background in this area meant that it was focused on the high end of the market, an area it is slowly shifting focus away from to concentrate on the low end.

`This is where the money is at the moment,' Pelosi said.

The two main drivers of this market in the short term, he added, would be the GST and, less directly, increased awareness of the need for power protection driven by the Y2K bug.

He estimates that expenditure on the GST will double that of Y2K concerns.

Both factors will generate greater demand among PC users and first-time buyers, he said. `Even if resellers only offload one UPS for every five computers, that still creates a big flow-on benefit to us.'

Typically focused on the high engineering side of business, Liebert has for the last few years been planning its descent into the low end of the market.

At present, the company claims to have the only `total UPS solution' on the market, offering integration with high-powered diesel generators.

Its foray into the low end was marked recently by the release of its PowerSure Personal UPS which is described as a market-entry SOHO product. `This is probably the cheapest product on the market,' Pelosi said.

Liebert recently signed Alston, formerly IT Connections, as its first national distributor.

The company sees APC as its main rival in this space. `APC has been in the low end for a long time whereas we're a bit new on the scene.'

A UPS today is more than it was even two years ago, but the major opportunities cited by a number of resellers who spoke to ARN differ little from those in many other sectors of the industry. They are largely driven by demand for UPS among new and existing PC users.

Most vendors are now anticipating increased sales as a result of PC add-ons.

Paul Smith, marketing executive with Upsonic Power, is anticipating a GST-driven spike in demand next year as more and more technology virgins embrace computers for the first time. `This is going to provide a great boost to business.'

He pointed to the vulnerability of point-of-sale systems as well as the fact that shopping centres have some of the worst power problems of any business environment.

`You have everything being run off the same power supply - air conditioning, elevators and so on.'

Upsonsic recently clinched one of the biggest ever UPS deals in Australia where it will take care of power protection across the entire Sussan retail chain.

Smith was critical of what he sees as the emergence of the `bells and whistles syndrome' among many UPS vendors, whereby flashy feat-ures are beginning to cloud the purpose of power protection.

One of the causes of this, he said, was the increased integration of UPSes and PCs which arguably led to an over-emphasis on graphical software at the expense of real functionality.

`There needs to be a balance - customers need to get their priorities straight.'

False sense of security

Another concern Smith pointed to was the emergence at the real low end of very basic `power board' products which `create a false sense of security'.

`At the end of the day, you get what you pay for. I've seen sites with $20,000 worth of servers being protected by a $150 UPS.'

The ability to explain the importance of proper power protection to buyers will be a key differentiator between channel companies in the UPS space next year, especially as the market settles and more sophisticated products emerge at the lower end.

Following this, companies will also seek to outdo each other in the services department. Upsonic launched its 24 x 7 customer support service four weeks ago and is now rolling out an extended service offering on-site maintenance and immediate replacement.

`This is the sort of offering companies are going to be looking for,' said Graham Penn, research director at IDC.

`As more and more people become reliant on computers and other technologies, the UPS vendors offering the best service and most sophisticated price/performance combinations will prevail.'

APC now uses a combination of mirroring and RAID storage in its high-end UPS solutions but anticipates a trickling down into the lower-end products.

`These are scalable as your computer environment grows.'

An inevitable transition for the UPS industry will be a movement towards UPS solutions which focus directly on protecting those aspects of a computer environment where data is most concentrated or more sensitive.

Solutions are using more and more software for more intuitive and responsive systems and are also incorporating storage systems focused on protecting servers, the building blocks supporting e-commerce and electronic data centres.

According to Jeff Braun, national customer services manager with Data Power, a Melbourne-based reseller of computer solutions to Australian industry, the SOHO market for UPS is still in the embryonic stage, with larger organisations still making up the bulk of customers.

The traditional territory of UPS manufacturers has always been in the area of server protection, although all are moving to reinvent the low end to accommodate smaller companies and even home users as the number of PCs increases exponentially.

With a server, the most significant period is the first 30 seconds, Braun said. `The server itself has some kind of cache or RAM which it syncs to the hard disk. If you don't have that data already written to the hard disk when there is a power problem, that data can be lost forever.'

The majority of UPS business in Australia and throughout the world has been dedicated to commercial business at larger organisations, or at least those large enough to justify the use of one or more servers.

But as smaller companies move into more network-intensive computing solutions, the importance of maintaining the integrity of corporate data is certain to drive a surge in sales of power protection technology.


Follow Us

Join the newsletter!

Error: Please check your email address.
Show Comments