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By William Van Winkle |
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[ Life After Inkjets ] This month, Costco is running a special on HP's 7410xi color inkjet print/fax/scan/copy machine. MSRP on the unit is $499.99. Regular Costco price is $449.99. The special at-register coupon slices off another $100. Moreover, if you get Costco's cartridge 3-pack during purchase, you can take off another $15. There are two lessons here: 1) Forget about trying to compete for inkjet business. 2) Bundling supplies and sales at the point of sale is obvious and effective—but an amazing number of resellers fail to do it. According to sales consultant and author Steven Power, "Only about 20 percent of all printers and multi-function printers (MFPs) sold include add-on services. That means most solution providers are missing out on 80 percent of the revenue potential of their sales."
The object is to find a printing niche into which you can sell product and then add in your margin with supplies and services attached to the hardware. Try to avoid direct comparisons with the mass merchants. For example, Costco's top-end unit from Konica Minolta is the magicolor 5450 color laser—so offer the just-released magicolor 5500 ($1,199 MSRP), which has a faster mono print speed, twice the duty cycle, a more powerful processor, PictBridge, and plenty of other value-add enhancements, including options for an automatic duplexer and a dual-bin output with staple finisher. There are still plenty of SMB offices that have never tried color laser, perhaps because of outdated ideas about costs. These companies and workgroups have no idea of the productivity benefits and stunning image quality color laser printers now offer. (Some may gape in disbelief when you show them the HP Color LaserJet CM1015 MFP, which retails for only $499.) The more you can state the case to them and back it up with per-page cost comparisons and live print samples, the less inclined these offices will be to shop around. Of course, color laser is just your foot in the door. From there, you can step into laser-based MFPs and explore the cost and space savings of a consolidated device. This class of office machine doesn't sell well on a retail end-cap; it's a solution that requires more expertise and discussion than many mass merchants are capable of. An increasing number of small business MFPs also support digital sending, the process of scanning documents and sending them across the network to destinations such as email, fax, or a NAS repository. According to IDC, an enterprise with 1,000 knowledge workers will waste $6 million to $12 million annually "searching for nonexistent information, failing to find existing information, or recreating information that can't be found." Digital send functionality can help increase efficiency and enhance regulatory compliance in companies of any size. We at RAM love promoting products that do well in the small business space, but the truth is that printing is a tough sell in businesses with 100 or fewer employees. Not impossible, of course—your personal relationships with such companies carry a lot of weight with the decision makers. You're simply more susceptible to direct competition from mass merchants. The sweet spot, according to Tara Agen, U.S. commercial and value channel operations manager for imaging and printing at HP, is the medium business space of between 100 to 500 employees. This is the zone in which you're most likely to succeed with higher-margin services. Some services are fairly straightforward, such as when networked printers proactively email the admin and/or reseller about low consumables, triggering a sales call. Many major printer manufacturers offer training for authorized maintenance and repair services. That's good work, but there's a sizable resource commitment. "Resellers have to consider how they want to manage their printer services," says Agen. "With a simple contract? Or do they place the hardware units and manage that hardware in a balanced deployment setup, proactively replenish supplies, proactively manage break-fix, etc.? They need to examine their competencies and see what makes sense, but customers are asking for it. This isn't an HP pitch. Our customers are coming to us wanting people to come in and analyze how their printing can be made more cost-effective. It requires a consultative approach." As a result, HP has an alternative program, barely six months old, to suggest: HP Smart Printing Services (SPS, see www.hp.com/go/smartprinting). Essentially, SPS is an end-user contract that spans hardware, supplies, and service; supplies and service; or just supplies. Potentially, the end-user gets leased hardware, installation and configuration, consumables, on-site service, and more for a single monthly payment. HP offers this direct, but there is also an arm of the program that provides for a reseller intermediary. SPS resellers get 6% to 9% of the total contract value up front, and HP estimates that new revenue streams resulting from SPS can yield 40% to 150% more printer-related profit. For resellers, there's no required training (although HP does offer SPS sales training), monetary outlay, hardware inventory, accounts receivable, or anything else. Your role is that of a consultant or outside agent. Meanwhile, your SMB clients have a more stable budget for printing services, long-term cost savings versus outright printer purchase, easier access to the latest MFP technologies, and more thorough end-to-end support from a single contact point at HP.
We see the SPS program as a great vehicle for resellers who either haven't become wholly committed to managed services or who feel that managed services in printing are not for them. Others may be more inclined to dig into printing services, and for these HP's products and technologies surrounding the Web Jetadmin application are a good entry point. Web Jetadmin is a Web-based tool for remotely configuring and managing a host of compatible printer peripherals. For instance, reseller admins can monitor a client's printer assets to roll break/fix services even before the client realizes there's been a failure. Alternatively, salespeople can analyze a business' assets via Web Jetadmin and approach buyers with optimized printing recommendations for each work area. Going with a hands-on, managed service approach definitely has a lot of upside revenue potential, but don't expect it to immediately be smooth sailing. "I always tell new VARs to recognize who their best customers are," says Agen, "because the first one you do is going to need a lot of patience, and you're going to need a lot of patience with them. But practice will pay off. Once you have the stars and moon aligned, that's when it seems to work best for solution providers." [ Security Sells ] Security has so many aspects and opportunities that it's hard to know where to recommend resellers place their efforts. Unified Threat Management appliances? There's a good one. Client security software? Also decent if you can get into the corporate world with its annual subscription commission revenues. But items like these tend to draw most of the attention in security discussions, which is why we're not including them here. Instead, we think there may be more margin opportunity in physical security, if only because physical security requires more on-site work, and some resellers prefer hands-off sales, which reduces your competition. In particular, we've picked a no-brainer element of physical security to target this year, one that nearly any knowledgeable reseller should be able to master: surveillance.
By surveillance we mean IP cameras, which range anywhere from $100 to well over $1,000. We started our research on this topic with a Portland, OR-area reseller with considerable success in the field: Jeff Sandine, president of Ballard Security. Ironically, we caught him on a day in which he was having considerable trouble supporting a consumer installation. No doubt caught up in the moment, he spent a couple minutes blowing off steam, describing many of the consumers in his clientele as "psycho" and "a disturbed element of society." Point taken with tongue in cheek. Consumers don't have trained IT staff versed in network protocols and router settings. And they're more prone to buy products expecting the flawless surveillance images they see in prime time shows and movies. With motion cameras, you get what you pay for. We've tested several IP camera designs, and the image clarity, light balancing, color accuracy, etc. you get suffers considerably below the $400 to $500 mark. Check out the Web cam at http://amwv.stagesound.com/cgi-bin/guestimage.html. This is probably the most exceptional image clarity we've ever seen from a network camera, but the German-made MOBOTIX (www.mobotix.com) M22M that captured the images costs $1,000—probably not the budget most home buyers anticipate. Moreover, there's relatively little opportunity for post-sale revenue streams on the consumer side. In the professional space, things look far more promising.
According to Sandine, most people in the security business aren't even selling PC-based technologies—92% of cameras sold are still analog, he says. A large percentage of installers come from electrical contractor backgrounds and sell CCTV cameras with stand-alone digital recorders because getting modern would necessitate keeping PC hardware/software support on staff. This presents a huge advantage for the IT world. The challenge is in convincing companies that when they want security, they no longer should call the old school, big name providers. Networked IP camera surveillance offers far better value. "Let's say an IP-based system costs 25% more up front," says Sandine. "That's the bad news. The good news is that it delivers 400% higher image quality. That's huge. Often, I can stop my sales pitch right there. But there's also no limit to the number of IP cameras on a network. On the DVR system, you've got a card that feeds into a breakout box with 16 BNC inputs in it. If you want more cameras after 16, you just add another system. You can do Power-over-Ethernet. There are lots of settings on IP cameras you can remotely adjust for different conditions. With analog, you get up on a ladder and start pushing buttons. Not good." Despite a relative dearth of installers, the market has no shortage of IP cameras. Sub-$200 IP cameras from the likes of Linksys and Hawking are nearly useless when it comes to image clarity, but they'll serve well enough if a customer only needs to monitor for motion. If motion is detected while the camera is in surveillance mode, an alert email can be sent to the appropriate contact, who can then check live footage from across the Internet. Moving up the ladder, you run into names like D-Link and Axis Communications (www.axis.com). D-Link has its share of lower-end models, such as the $95 DCS-900. Another $50 will add 802.11g support. Things get more interesting with the DCS-1110 ($250), which adds Power-over-Ethernet support, and the DSC-3420 ($700), a wireless-enabled unit with removable lenses for low-light and night viewing. The company also boasts a growing line of outdoor camera enclosures.
"Now you can put your IP cameras out in the weather and they won't get wasted," notes D-Link's Michael Scott. "And there are different levels of those. You have standard outdoor enclosures that you can put a camera in, and it'll survive in sunlight and rain, all the way up to one you can spray with a fire hose and your camera will stay dry. That's based on IP66 certification for water-resistance and dust-proof operation." D-Link, Toshiba, Panasonic, Axis, and others also offer motorized pan-tilt-zoom (PTZ) cameras with varying levels of optical zoom. These generally start around $900. However, Ballard's Sandine points out that while PTZ cameras may make for great demonstrations, only about two out of every 100 cameras he sells actually use PTZ capabilities. The rest are fixed-position models designed for broad coverage of multiple angles. In a room with four fixed cameras, a client might need a fifth PTZ camera to zoom in on this or that detail while under remote control.
Perhaps unexpectedly, there's also a decent chance to tack on some managed services with an IP surveillance sale. Sandine recounts having had "countless" situations over the last few years where a company bought a Windows-based monitoring system, stuck it in a closet, and never looked at it until after a security breach. The next morning, management opened the closet only to discover that the Windows box had locked up three months before. This is why an increasing number of companies should and do want someone to monitor the security system. This means performing maintenance on the DVR system, using remote management tools to confirm that it's 100% operational, checking that each camera on the network is working and hasn't been moved, and so on. If you decide to expand your surveillance business in time, you may even want to offer clients the choice to have all of their surveillance footage stream into a server farm maintained at your establishment or elsewhere rather than having them store to a local system on their premises. Barring that, it goes without saying that there's no reason you can't build and deploy the client's DVR systems. "The number one thing to do when starting in surveillance is to lower your customer's expectations," advises Sandine. "People buy these cameras thinking they're going to get facial recognition and read license plates. They don't. People buy cameras with infrared lights on them thinking they'll be able to see at night, and they don't. And even when you do get a night image, it usually looks like crap. Cameras that can see 150 feet in the dark start at a couple grand. And be aware that guys are on the Internet selling Axis cameras five points over cost. So installing the camera management software, setting the cameras up properly, choosing the right locations—that's where people need experts, and that's where you'll make your money." |
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