NEC targeting North American server market 2 September, 2008 By Liam Lahey

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Ken Hertzler, director, departmental server products for NEC, said as a global company competing with the likes of IBM and HP, one of the drivers for NEC's product development has been the trend within datacenters to move towards VMware.

"Now with Microsoft coming out with Hyper-V as well as Citrix with their ZenSource acquisition, those are the platforms we're seeing as the new operating systems for all these server products and our resellers are very much engaged in this," he said. "VARs and systems integrators are getting from their customers the need for hardware and software technologies that are virtualizing [sic], that can consolidate and run multiple applications on a single box."

Though the vendor already has a significant OEM install base here, NEC would reposition its server product line, Hertzler continued.

"We've had for 15 years now an OEM channel in North America as our primary distribution for all of our server products. It's been great for our business but unfortunately it has not been great for our brand name," he said. "Our OEM partners put their names on our boxes. Network Appliance is one our largest OEM partner in North America, Stratus Technologies OEMs our fault-tolerant server, and IBM actually has part of their product server line built by NEC.

"Over 95 percent of our revenue is OEM. What we're trying to do and the change that NEC has been under for the last six to eight months is we're now moving into distributing our products under the NEC brand name and moving into new channels."

In terms of branding, he said NEC is leveraging its existing relationships with NEC-branded products and it is actively pursuing its niche market in the fault-tolerant space ("VARs are finally saying 'I didn't know there was a fault-tolerant server on the market at this price point'," he added). Meanwhile, the company is moving into mainstream channels by way of new partnerships with Synnex Corp. and Tiger Direct.

"The reason Synnex went with us is because they were the only top 10 distributor carrying only two brands of servers and they were looking for a third brand and we were looking for a distributor, so it was a marriage made in heaven," he commented. "Four or five months ago we signed that agreement and we'll be a major player at their upcoming channel sales regional sales conference in October and we're starting to push our products through various programs we're doing through Synnex."

By inking Tiger Direct to a deal, NEC is targeting the low-end of the server market. "Tiger Direct sells pretty much only Pentium and Celeron-based servers at the low-end and starting at $500 as a base unit, we're now coming out with products in that category," he said.

The new NEC i Series rack server is 'green' in the sense NEC redesigned a 1U server with a low-voltage CPU, low-memory chip, and a redesigned power supply. "You'll see a lot more from NEC on these types of servers in the future."

NEC also extended its blade product line with the release of the Express5800 4-socket blade. "This is important to VARs . . . they like the fact they can get more memory and processing on a very small footprint," he said.

Also for the low-end of the market, NEC has unveiled its Series1800 Pentium servers. These Celeron-based tower units are to be primarily sold through corporate resellers and Tiger Direct as well as a few other catalogue vendors. Down the line, expect the vendor to get into the workstation market as it expands its Virtual PC product line.

"Even though NEC is a well-established throughout the world, we are not well-established in the North American market when it comes to NEC-branded servers so from our perspective it's all upside," Hertzler added. "Initially we'll do more brand awareness in the channel. Next, we'll embark upon an end user campaign in the New Year and we will be spending a few million dollars to create more brand awareness on the customer side."