RAM | Reseller Advocate Magazine: Issue 65

By William Van Winkle

I DON'T KNOW IF IT'S LIKE THIS for other dads who have little kids. For me, anyway, it's embarrassing. In talking with manufacturers about channel trends, hearing the word "teamwork" is unavoidable these days, and every time it happens my brain flashes onto this Nick Jr. show called Wonder Pets! In every mind-numbing episode, this little guinea pig, turtle, and baby chick escape the confines of their kindergarten classroom to go have a cooperative adventure saving some animal somewhere. Inevitably, they end up singing: "What's gonna work? Teeeamwork!"

Children's shows are supposed to be educational and set positive examples on which kids can model their future behavior. Compared to the several inexplicably popular series based on Japanese anime, Wonder Pets! comes off like a prep sequence for Harvard Business School.

Much as it pains me to watch the show and have its inane music drummed into my head, there's no escaping the wisdom of its central message: teamwork wins the day. Characters who are loners tend to be unhappy and/or bad guys. Is it surprising that the companies promoting the most bundles—the most inter-vendor teamwork—also tend to be the market leaders?

Clearly, there's more going on here than simply knocking off a couple points to sell more product. You can find that sort of thing every quarter in single-product instant rebates that aim to push trailing-edge SKUs out the doors for good. Think Pentium 4, which has had instant rebates through authorized distribution ever since January.

While one-off rebates may be fine for giving a nudge to the bottom line, they're not effective at building business. You're not going to bring in a Pentium 4 with a $7 discount on it, push it out the door in a $499 desktop, and have the customer come back in two weeks saying, "Holy cow, this Pentium 4 stuff is hot! I'll take another dozen!" That said, a smarter Intel promotion might be the just-ended $400 rebate on Intel's SSR212MA server, which was accompanied by a 50% discount on the Scalability, Configurable Snapshot, and Remote Data Protection license packages. This was a one-off deal, but it came accompanied by adjunct products that can help you build perhaps new value and functionality on a product with which you're already familiar.

Still, I'm not a huge fan of singular incentive offers. If you're going to take the time to follow channel promotions—and you should—then you'll get the most return on your efforts by searching out smart multi-vendor bundles that can expand your knowledge and hopefully help edge you into new product categories.

Where to find such deals? It's not uncommon to see bundles in e-tail. In fact, when I asked NVIDIA about their bundle offers, the reply came back that they do several motherboard/CPU, CPU/GPU, and motherboard/GPU arrangements through major sites. Hop on Newegg and you'll find no shortage of examples, such as a $20 knock-off when an eVGA 8800GTX card is bought with an Enermax EIN650AWT power supply. The downside, of course, is that Newegg gets to claim any program sales benefits, co-cop, MDF, and everything else that comes with buying through authorized channels.

The interesting thing is that NVIDIA did not come back to me with information about the two incentives it has going with Intel's qualifying Core 2 Duo chips. NVIDIA 650i SLI boards purchased with an E6400/6600/6700 earn a $15 break through April 14th. The same chips combined with a GeForce 7100 or 7300 graphics card get a $7 discount, and the offer is good for up to 50 bundles. You only need to buy the bundle through your choice of ASI, D&H, Ingram Micro, SYNNEX, or Wintec. Why these deals didn't spring to mind instead of e-tail I'll leave to your interpretation. Suffice it to say that vendors have many interests, and they're often caught in the irreconcilable bind of trying to please multiple channels simultaneously, and sometimes things fall through the cracks.

To help avoid these gaps and expand your options in the process, turn to first- and second-tier distribution. In most teamwork scenarios, it pays to have one person coordinating everybody's best attributes and leading the way, and in this context that means a strong distribution partner. The marketing people in these companies get to hear all of the spiels from all of their vendors, and they have the wide-reaching perspective to know what products would constitute a strong value-add bundle capable of yielding the best long-term results for all parties involved, especially the reseller.

Nearly all distributors work to create and market multi-vendor bundles. D&H just does it better than most, as seen in the company's Vista promotions Web page.

Interestingly, different distributors have different views on bundles. Some profess to engage in bundles as a channel building tool while others see it as more of a way to capture vendor marketing funds. In a surprising bit of blunt honesty, Heather Murray, Intel components marketing manager for Tech Data, noted that she doesn't believe bundles work in distribution, at least not as intended.

"They are great for advertising and offering complimentary products," she says, "but it is very rare that you actually see an invoice go out with the bundled SKUs all at once. In my experience, if the advertising plan is strong, you will see an uptick in sales on each of the SKUs...just not bundled together."

In this light, having bundles effectively working as billboards isn't necessarily a bad thing if you view them as awareness campaigns. These are two or three great tastes that taste great together, so to speak. By seeing the products juxtaposed, you begin to consider new possibilities for how they can be leveraged.

Different distributors pursue bundles with varying amounts of enthusiasm. There's a trade-off in the potential for building business versus the headache of discount administration on the back end. But D&H has grown into one of the most forward sources on this front, often acting in an advisory role to vendors who want bundle partners but aren't sure which ways to lean.

"We work pretty aggressively with vendors to help them put together complementary offerings," says D&H vice president of marketing Dan Schwab. "We have found that just bundling two SKUs is not successful as you eliminate a large portion of the universe that would be interested in both vendors but maybe a step up or step down version of one of the SKUs. Instead, we promote bundles by vendor category. A good example is our current Vista initiative. Our resellers have exclusive offers that D&H orchestrated. If you buy both Microsoft Vista and any products from participating vendors, or even just categories of products from multiple vendors, you get steep rebates."

If you study D&H's Vista Promos page, you'll see multiple strategies in play. The very first items under the banner are $10 rebates on primary components: memory, hard drive, monitor, CPU, etc. But scroll down and you'll see small rebates on a couple of Creative Live! Cam Video units. Web cams? With Vista? Sure. Microsoft is always saying that Windows is about experiences, so why not drive the point home here? Keep scrolling and you'll run across Corel WordPerfect Office X3 Professional. In an age where MS Office is everywhere, having a far more affordable, similarly feature-rich alternative suggested for Vista machines makes a lot of sense. And way down at the bottom of the page, you'll find promos on the Xbox 360 and Slingbox SlingPlayer for Windows Vista. Most people think they understand these devices, both of which sell primarily through retail, but both have special functionality enabled through Windows Vista—functionality that a reseller can illustrate and most mass market outlets can't.

Vendor teamwork and bundles can be instrumental in propelling new technologies. I sat in on a meeting at Intel a couple of months ago in which the company brought together not only various members of the channel press but also representatives from a handful of key vendors. The purpose was to discuss vPro and what each attendee's thoughts and assets were in approaching the subject. The goal was not to figure out how to sell more product but to figure out how everyone involved could cooperate and market a compelling platform solution for the betterment of the whole channel. Because vPro as an Intel-only solution is just dead hardware; only with third-party participation and intelligent cross-vendor cooperation can the platform really alter the business landscape. Intel sees this clearly—how could it not after the object lesson of Viiv?—and I expect you'll see the fruits of this and subsequent such meetings by the third quarter. You can see smaller-scale and more immediate examples of the same idea in LSI's recent cooperation with Seagate as both companies realize that by promoting Serial Attached SCSI in tandem, they have a much better chance of pushing the technology into the mainstream than they would separately.

The obvious benefit to resellers of vendor teamwork is lower pricing on promotions. And thankfully, the old days of having to buy small mountains of product in order to qualify for benefits seem to be gone for good. All of the bundles I've mentioned above can be had in single quantities. But there are secondary benefits to this vendor teamwork that may not be so apparent. In most cases, these multi-vendor product bundles have been tested and at least unofficially validated. This largely eliminates the risk of trial and error in component selection, which saves time both in configuration up front and support after the sale. Also, if you pick the right bundles, you can take the reputations of the vendors involved and promote them as part of the value of your offering. Brand recognition sells. And hey—it's a fair bet that the distributor is getting marketing dollars for this bundle. If you build a promotion around these lower-cost bundles, you might be able to parlay the advertising into some vendor dollars for yourself.

Any way you look at it, multi-vendor teamwork and the bundles they offer are good for the channel. And you never know. Perhaps there's a teamwork message in here for resellers, as well. Could it be that the channel might be healthier if individual resellers learned how to collaborate, pool their resources into something larger than they can accomplish separately, and be better teamwork players? We all know from children's TV what happens to loners.