Merisel increases market by feeding supply chain: wholesaler sees decline in allure of bells and whistles.

Merisel increases market by feeding supply chain

When business owners return from computer shopping, more and more they are looking to get more work from their workers. That's unlike the go-go 1980s, when companies were more concerned with the newest-fastest-fanciest computing solution, than with price.

One snapshot of the computer-products scene is found looking at the distribution channels of Los Angeles' largest wholesaler, Merisel Inc. The $1.2 billion revenues El Segundo company operates warehouses around the country supplying products from about 400 manufacturers to about 7,000 retail stores, like Businessland and Egghead Software.

"Even after the war, with people starting to spend money again on computer products, they're more dollar-and-cents conscious," said Linda Kroog, Merisel's vice president of products. Above all, "they're looking especially for fairly inexpensive ways to increase productivity."

Because Merisel is the creation of an April 1990 merger of Softsel Computer Products and Microamerica Inc., year-to-year sales-comparison figures do not exist. But interviews with Kroog's four marketing executives reveal where buyers are putting their dollars.

Allan Schroeder, 34, is director of Merisel's peripheral products. That comprises printers, color monitors, printed-circuit boards, input-output devices, accessories, hard-disk drives and tape backups.

LABJ: What's hot?

SCHROEDER: Laser printers.

LABJ: Why?

SCHROEDER: Prices have come down and end-users like the product.

LABJ: For example?

The Okidata model 400 retails for $995. That's down from $1,495 about six months ago. The QMS Model PS 410 retails for $2,895. It's new, but six months back you had to pay $5,000 for a comparable printer.

LABJ: But the more expensive model, the 410, sold better, according to your March sales rankings. Aren't buyers today supposed to be tighter fisted and smarter?

SCHROEDER: We ran out of the cheaper 400! We couldn't keep it stocked.

LABJ: What product is dragging? And why?

SCHROEDER: Probably tape back-ups. Because they're not essential. In recession and during war, non-essentials don't do well.

LABJ: And the future?

SCHROEDER: You'll see buying of larger hard drives for storing larger programs; larger color monitors - for Windows applications - you need a bigger screen for its |windows'; and more laser printers, for (character-printing) quality."

David Weiss, 37, director of software products said his steepest sales gains are with Microsoft's "Windows" software. Offered since 1987 but gaining greater acceptance in 1990 revisions, Windows creates one or more window images on the screen so the user can peer into several programs simultaneously. A "mouse" is used for commands, supplementing the standard keyboard.

LABJ: Why is Windows hot?

WEISS: Generally Windows is going to increase your productivity, over the long term.

LABJ: How so?

WEISS: It saves you time. For instance, you can put a spreadsheet (program) and a word-processing (program) and a letter on your screen - all at the same time.

LABJ: You don't have to close out one program and pull up another.

WEISS: Right. Also, people like to point, click and drag. It's more friendly.

LABJ: What about the cost?

WEISS: Windows is not expensive. I've seen it for $89.95 retail.

LABJ: But many programs can't run with Windows, right?

WEISS: Most software publishers today are offering some sort of an upgrade program to move you into a Windows version of their product. So for, say, $100 or $150 you can buy an improved software that also works with Windows.

LABJ: That's almost giving Windows away.

WEISS: It's like the theory of giving away razors so you can make money on the blades.

LABJ: That's the strategy of Microsoft, the publisher of Windows.

WEISS: It has really kicked into high gear: There are 600 programs under development (by other publishers) and 1,000 already out there that work with Windows. By 1993-94, somewhere between 40 percent and 50 percent of the 60 million DOS computers with Intel chips will be using Windows.

LABJ: What product is cold?

WEISS: Nothing in software is, like dying. But non-Windows applications are probably flat compared with last year.

Steve Hart, 30, is director of connectivity products. These include devices for data communications and "networking" - joining many personal computers together.

LABJ: What's hot in connectivity?

HART: I think it's network interface cards.

LABJ: We know the cards are necessary to hook up PCs, but why do people want to network now?

HART: The No. 1 benefit is increased productivity. I could send you a file (through a linking cable) rather than walking it over. We could share the same data base, send electronic mail back and forth . . .

LABJ: How much?

HART: For like $500 or $600, you can buy a low-end package that will allow a couple-three machines to communicate together and share a laser printer.

LABJ: But a lot more if I wanted to tie into to a mainframe computer, and network with staff in New York, and . . .

HART: It could cost you $300 a node.

LABJ: A |node'? You mean for each desk-top computer?

HART: Right.

LABJ: And what product are businesses cool on?

HART: Stand-alone fax cards are fairly slow. More people are going to fax servers: Put one card into one computer and hook it into the network. So you can send a fax right from your desk.

Rob Batchelder, 35, is Merisel's director of system products. These include portable computers, desktop computers, workstations and shared-machine computers, or "servers."

LABJ: Where's your steepest growth?

BATCHELDER: Its with laptops.

LABJ: Why?

BATCHELDER: A lot has to do with work trends. Many people want to take their computer home or on the road, have more flexible hours.

LABJ: But what's new about that?

BATCHELDER: Well, the advances of miniaturization let you pack the power of a desktop-sized computer into a book-sized. And the price has come down significantly. The displays and battery life are better.

LABJ: For example?

BATCHELDER: The Toshiba 1200XE laptop, the No. 1 on our |Hot List' of sales, is the size and weight of the L.A. Yellow Pages, about eight pounds.

LABJ: And that product last year . . .

BATCHELDER: . . . would have cost 25 percent more. The price has come down to where people will buy them as second computers.

LABJ: Who are the primary buyers, for productivity reasons?

BATCHELDER: Oh, sales forces, field service organizations and delivery services.

LABJ: What systems product is very slow?

BATCHELDER: The older desktop computers. They'll have sales growth in the single digits or low teens over last year. We expect that desktop with the 286 chip will really fall off the table.

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