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August 9, 2013

Q&A: Out with the new and in with the old

Mike Sheldon, chief executive at Network Hardware Resale, tells Duncan MacRae that examining the true lifecycle of equipment could save companies a small fortune.

By Duncan Macrae

What’s been happening at Network Hardware Resale recently?

We’ve recently moved from a focus on networking to a much broader focus on servers, storage and maintenance. We think the maintenance area is one that’s massively underserved. Network hardware has stepped in, we hope, to fill that gap. We’re quite a large company. We’ll do about $275m in revenue this year.

We’ve got facilities all over the globe. We have a real global reach as far as delivering network hardware and support. We’ve also built a network of almost 400 depots. We can offer smart hands in the field to go along with hardware delivery. We can offer next day support and technical service over in 17 different languages the phone all in-house.

When did you start dealing in server and storage equipment?

We’ve been in the business for a couple of years but we like to be truly competent before announcing that we’ve got that ability, especially on the maintenance side. So it took us a while to get the people in place. In January this year we launched it as a formal product but we’ve actually been going for a number of years.

Was this a change of direction for the company or more just an effort to compliment your portfolio of offerings?

It was a little bit of both. It certainly does compliment it. We’re talking with It engineers, procurement managers and executives, it’s uncommon that the data centre is broken up, separated into networking into networking equipment and server and storage equipment. It’s generally managed by the same team and budgeted by the same team. So we were already talking to the buyers and the engineers managing most of this equipment so, in that sense, it was a natural area that we wanted to expand into.

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What do you think sets you apart from your competitors?

We really compete against the manufacturers. We don’t compete too much against the other secondary market resellers because we’re so much larger, and the products and services we offer are so much broader. We don’t want to sell a $600 box $10 cheaper than the next guy. We want to build long term relationships with big companies and help them do network management, maintenance, trading and lifecycle management.

So, in the UK, we compete against Cisco gold partners and telecoms companies – compete and partner with. The main advantage we have is all of the end-of-life, end-of-sale hardware and maintenance products that they can’t. For many of them, it’s a very natural partnership but occasionally, when we compete for the same deal we end up in competition with each other.

How has the company been developing in Europe?

Europe has been a very tough market and for us, and I imagine any other pan-European company, there are really two Europes. There’s the Mediterranean rim and then there’s core Europe. In core Europe business has been quite good and it’s been growing this year over last. We’re adding sales people and we’re adding resources. The counter point to that is that on the rim – Italy, Greece, Spain, Portugal – it’s been tough. Our business has been roughly flat over the past three years and it’s been a struggle. There’s no question. We’ve lost customers and had to find other to replace them so it’s really a tale of two cities if you like.
Going forward, I think our business is better positioned to rally sooner than perhaps other sales businesses.

IT infrastructure, in particular, network infrastructure, in the world we live in is not something that companies can push off expenses forever. You’ve got BYOD, you’ve got streaming video, you’ve got a lot of pressures that companies, which haven’t invested in for three or four years, are really going to struggle with. They’ll begin to be uncompetitive if they don’t make some investment in this.

Most companies buy products in the middle of their life cycle anyway. We can deliver the products they need at roughly half the price and roughly one third the cost of maintenance. If companies are going to spend anything in tough times I think they’ll spend it with us.

To what extent do you think CIOs and company directors understand the true life cycles of IT equipment?

I don’t want to tar everyone with the same brush. I think, in general, most companies have gotten the information about the lifecycles of their products from the manufacturers. I think that’s a dangerous source for that information.

Manufactures make money from selling equipment. It’s in their interests to prematurely roll the equipment over, touting new features and increased performance, when those new features certainly exist but may not be necessary. And the performance, while better, may not be needed. If companies take a hard look at their products’ lifecycle they may take a more nuanced approach, breaking equipment up into groups. A security product probably has a three or four year lifecycle, a router product might have a five or six year lifecycle and an Ethernet switch in most application could have up to a 10 year lifecycle. I think most companies don’t view their equipment in that way.

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