Win Bids With NAS

Selling an easy-to-implement, low maintenance product with potential for value add sounds like a good deal for VARs. VARs could try to sell traditional, higher priced servers to their customers with higher margins, but no hardware products offer truly high margins today. The traditional server costs more money and could potentially scare customers into living with whatever legacy equipment they have.

"VARs really like NAS because it helps them win bids against other VARs that quote standard servers," said Jim Simon, director of channel marketing for Snap Appliances, Inc. (San Jose, CA). "The hardware takes a high portion of the bid, but not much margin. VARs can pump up their services and realize huge margins."

Many IT departments are slowing their IT spending this year. A Merrill Lynch study suggests a slowing in IT budget growth from 12% this year down to 8% next year. The median budget growth of the 146 CIOs responding to the Merrill Lynch survey was 5.8%.

IT Spending Down, NAS Awareness Up = Profit For VARs
IT spending growth is down, and market awareness is up. This may be a very good sign for the NAS market. As indicated above, the low cost of NAS compared to conventional servers often helps VARs win a bid.

"Last year our friends at Snap spent a lot of money advertising Snap. Because of that market awareness has risen, and 80% of IT buyers know what NAS is. The entry level has started to get some traction," said Tom McCrystal, VP and general manager, Microtest, Inc. (Phoenix).

"VARs appreciate NAS. If their customers are on maintenance plans, in which they pay a fixed amount per month in case they need service, it makes sense to sell the customers a reliable product. But even if the VAR is paid on an hourly scale, most NAS appliances can be repaired in less than an hour, while service call minimums are two hours," said Simon.

Implement NAS For Backup
"New opportunities for NAS are found in the backup arena," said Simon. "Now that NAS is so inexpensive, a lot of VARs are backing up to a NAS while they get their Windows 2000 up and running."

McCrystal agrees that NAS appliances make good backup solutions. "You can put a SCSI (small computer system interface) on the back of a NAS appliance and run a backup of the files that have changed. A problem occurs though, if the system craps out. Say you have a terabyte of data that has gone offline. Restoring that amount of data can take days. The data isn't going to be lost, but it takes too long to get up and running again. However, if you're using two NAS boxes that way, and one is lost, the other will probably still be running. There is no single point of failure that way. You don't have to restore because you have a duplicate copy of your data already."

Mid-Range NAS Market Taking Off
"Recently a few of us at Snap Appliances went out across the country and visited more than 50 VARs," said Simon. "VARs said they wanted NAS devices with larger capacities. They wanted higher priced units so they can add more value."

"We're seeing the mid-range market starting to happen," said McCrystal. " We've seen a high-end market and a low-end market. Now we're seeing the mid-range market come into play.

"We have to bear in mind that the PC demand is down," said McCrystal. "Companies that have been involved in producing hardware will be getting into NAS now. A recent wave of NAS products has come out from Dell, Maxtor, Snap, Procom, and others. Fear, uncertainty, and doubt will face VARs and integrators."