RAM | Reseller Advocate Magazine: Issue 66

By William Van Winkle

GO BACK TO THE EPIC OF GILGA mesh or the Old Testament or Plato's Laws or practically any of antiquity's deluge stories. There were warnings. There usually are. Consider the South Fork Dam, once located 14 miles above Johnstown, Pennsylvania. Thirty years after its construction, the dam was overgrown, its drainage system rusted and clogged, its new owner more concerned with creating a bass-filled retreat for wealthy sportsmen than responsible maintenance. When different engineers offered mixed assessments of the dam's safety, management listened to the optimistic ones. On the morning of May 30th, 1889, following torrential and ongoing rains, the sporting club's in-house engineer saw the danger and sent a message into town saying that the dam was in "bad condition," even when he knew that collapse was imminent. When the center of the dam cracked and gave way in mid-afternoon, 20 million gallons of water rushed down the narrow valley (see painting above), drowning Johnstown and killing thousands. Some citizens fled to the hills; others scoffed and died.

You have to see when the waters are rising and know when to move to higher ground. In our business, this often happens among vendors. As I write this, rumor reached me that HP will be moving into the commodity memory space—a smart decision given HP's already titanic volumes of memory consumption from its systems business. But if you're Kingston, what do you do? The waters will soon be swirling around ValueRAM's neck. Kingston has never gained much traction among higher-end users with its HyperX line, and flash products are a dime a dozen. And speaking of HP, perhaps you saw the new HP Compaq dx2020, an all VIA-based PC (using the 1.5 GHz, 20W C7-D processor) being targeted at China. For the first time, VIA makes a big score with the number one OEM to capture share in the emerging market. So is it any coincidence that I'm sitting here holding a pre-production sample of the Intel D201GLY, an Intel-brand motherboard based on VIA's own Mini-ITX form factor? This marks the first time Intel has released a motherboard with a soldered-on processor.

I'd heard rumblings about such a project in months past, but the last I knew it had been scrapped. Behold, here comes the D210GLY ("Little Valley"), due for global release on May 21. This can't have been an easy decision for Intel. Not only does it use a non-Intel form factor, the board features SiS' 662/946L chipset. Equipped with integrated DX7-class graphics, one DDR2 slot, and a single PCI slot, the board is something akin to the old 845G platform, only a lot smaller. But it's here in front of me, running Windows XP and MS Office quick as a whip on my bench. The integrated audio and 10/100 Ethernet are fair enough for common use, and Intel backs the board with a three-year warranty although not with advance replacement. The mark of Intel's eagerness and nervousness is that this Celeron 215-based board will sell to the channel for under $70, thus allowing fully featured $299 whiteboxes—perhaps even $199 if you opt for Linux and/or use a bootable flash drive like, ohhh, Intel's just-released Value Solid State Drive, available in 1GB to 8GB capacities with pricing expected to start under $25. With no hard drive and no need for an optical drive in some environments, consider the form factor possibilities. This opens up all kinds of interesting industrial and enterprise SFF opportunities.

The D201GLY has got to take a big bite out of the prospective market for the Celeron 300 series paired with any of Intel's Essential Series boards. It may even siphon off sales from Allendale, a.k.a. the just-released Core 2 Duo E4000 series being targeted at $399 PCs. Nevertheless, Little Valley is a huge play for the emerging market, education, and some thin client scenarios. For resellers, Little Valley is an interesting card to play in the "good, better, best" scenarios for entry-level systems. Clearly, Little Valley is "good," and for a few bucks more, you can decouple the CPU from the motherboard and get "better" by way of Allendale.

So if I were VIA, I'd be listening for the rumble of approaching water right about now. The 1.33 GHz Celeron 215 is a 27W max TDP part, which isn't quite as good on paper as VIA's 20W, but keep in mind that this is a Core microarchitecture CPU, albeit with only one core and 512KB of L2 cache. With Core's enhancements in play, I'd be curious to do a real-world, side-by-side power consumption evaluation. But let's say it's a push. With power consumption out of the question, how many people care that VIA's chip is carbon-free? Intel has RoHS compliance, and I'm betting that's good enough for everyone who didn't buy Al Gore's DVD. If so, if Intel blows a hole in the last remaining bastion of VIA strength, can the little chip company keep its head above the current?

But I don't want this to be a discussion about the low-end market. The point is that no market segment is safe from getting flooded. And you can't just look at this month's headlines; you need to look one, two, maybe five years into the future and extrapolate from the past.

Management consoles from the likes of Level Platforms are so easy that virtually anyone of any age can run them. That being said, what value can you add?

Consider managed services. This is the channel's hot button du jour. "Hardware is dead! You must be in managed services! It's the only place to make easy money!" Well, it is...and it isn't. Personally, I don't think "easy money" gets any easier than a good defrag and taking a can of air to the inside of a chassis for $50 an hour. Except maybe the $49 Geek Squad charges to tell you over the phone how to plug in a USB printer or the $129 they'll pummel some poor technophobe to network an Xbox.

Consider the managed services behind vPro, Intel's digital office platform. I have nothing but good things to say about vPro, and if you're still not up to speed on the subject, I'd strongly encourage you to check out the cover story on Issue 4 of RAM's sister publication Tech Insight (www.reselleradvocate.com/public/techinsight). So far as this discussion goes, vPro lets you, the reseller, take over monitoring the status of your customers' client machines; manage, troubleshoot, and repair them; and update and patch them. You can do this from anywhere at any time, even when the client is powered down.

Now, compared to slogging through the Yellow Pages for new systems business, managed vPro services can be pretty sweet. That's why you have DIY facilitators like SyAM providing software for resellers to build their own in-house services or bigger entities like Level Platforms doing most of the work and cutting reseller agents back a monthly commission. Even in this month's cover story, you see Terian offering the same sort of play in the hosted storage space.

This is easy money. In fact, I'd wager it's so easy that it won't be too long before the tier-ones wake up and say, "Hey! That looks like easy money!" And would anyone be surprised if Microsoft turned around sometime between now and when Zune becomes profitable—I know, that could be a long time—and dropped a bomb like: "Guess what! We're going to offer remote management for vPro systems as a service, just like all those services you see for vPro, only better because it'll be us doing it. And it's totally free for client PCs running Vista SP2. All you need is one of the newly price-hiked Windows Server OSes to make it happen. Better yet, support and administration will be free unless you want to speak with a Certified Support Professional located in the country of our choice."

Come on. Check your Magic 8 Ball. You know this is the way it'll go down. Or something like it. You can hear the dam holding back Lake Managed Services starting to creak and groan now, and every time managed services get easier for the channel, it's like the water level rising a few more feet.

In January of 2003, I was writing about how resellers could leverage the new network-based capabilities of business printers to create a recurring services revenue stream. Only two years later, I was writing about how resellers can be agents for HP's Smart Printing Services, which encompasses most of the services I was touting for resellers two years before. This isn't uphill ground. You can sell it, your competitor can sell it, Office Depot can sell it, and certainly HP is more than happy to sell it direct. How are you ever going to get off the valley floor here? You can make a few bucks, but you're not likely to grow your business. Whether we're talking about vPro or printers or storage or anything else, you cannot stake your income on just offering managed services. Sooner or later, the dam will crack and you'll be buried under a towering wave of tier-one competition. Any primate can run a management console. Your remote management competitor may be a sub-contracted kid reinstalling a Linux drive image while text messaging his girlfriend in Algebra II. Why not?

But what that kid, or the mass merchant or tier-one OEM behind him, can't do is walk into a customer site and sit down to map out a technology strategy blending that client's priorities with the data mined from his current management statistics. Managed services are not the end game; managing the customer is. Managed services only liberate you from being on-site in one sense. In another sense, they obligate you to be in front of that customer as much as he'll tolerate. Don't send him a link about a new product—show it to him. Don't email him a synopsis of his monthly report—deliver it on paper (and on CD) with highlighting on the critical parts that need discussion, and bring a couple pizzas for the crew. Who cares about $50 in pizza when you're bringing in $5,000 in managed services profit? Be human. Be real. Manage the customer, and don't give your faceless, less experienced, far more marketed competition the chance to steal your business on price. You must demonstrate over and over the additional value your services, both managed and on-site, bring to your clients. Or you will die.

The National Park Service writes: "When the full story of the [Johnstown] flood came to light, many believed that if this was a ‘natural' disaster, then surely man was an accomplice." I'm sure we can all think of other, more contemporary "natural disasters" that fit the same description. The environment provides the stress; the outcome of that stress rests largely in our own hands. I want you to see the dam further up the valley and find your way to higher ground now before it's too late.