Hall-Mark Global on a Mission To Help Resellers

By Richard McCaffery, Staff WriterJust two months after Avnet Inc. knit its enterprise computer products companies into a $1.4 billion global business unit, that unit has formed a division to distribute a focused line of high-end products to the federal government.Hall-Mark Global Solutions of Tempe, Ariz., has assembled a division to help resellers sell Compaq Computer Corp.'s line of Alpha workstations, servers and storage products to government customers. It is the first time Hall-Mark has set up a unit dedicated to the public sector market."The opportunity is huge," said Maury Freedman, manager of government programs at Hall-Mark Global Solutions. Freedman heads the new government division, which is based in Columbia, Md., and was formed July 6.Hall-Mark will have to compete with other distributors that offer Compaq's Alpha products in the government space. Companies such as Tech Data Corp., Ingram Micro Inc. and Gates/Arrow Distributing, a division of Arrow Electronics Inc., carry Alpha products. The Alpha line consists of high-end computers and storage products, more complex than standard PCs or servers. The complexity of the products and Hall-Mark's experience working with them should give the company an edge, Freedman said."We are the largest distributor of Compaq enterprise products through resellers," he said.For Houston-based Compaq, the agreement reached with Hall-Mark is an example of how the company relies on the sales channel, especially companies that commit resources to developing expertise with certain products."Just about everything we do is [involved with the channel] in one way or another," said Gary Newgaard, vice president of Compaq Federal. "There's a good reason for it. There's a force multiplier that cannot be equaled in the market."Founded more than 50 years ago, Phoenix-based Avnet distributes electronics components, such as semiconductors, and computer products, such as desktop computers, to resellers worldwide. It had $5.9 billion in sales for the year that ended June 30, 1998. Fiscal year 1999 results have not yet been reported. About 75 percent of Avnet's revenue comes from electronics components, and the other 25 percent comes from computer products. The company's main competitor is Arrow Electronics Inc. of Melville, N.Y. Avnet has been growing through acquisitions throughout the 1990s and expanding into new markets in Europe and Asia. In 1993, it purchased Hall-Mark Electronics, and in 1998, it bought Bytech Systems in England. Last year, the company shed several non-core divisions to focus exclusively on the distribution of electronics and computer components. In May, Avnet rolled Hall-Mark, Bytech and another acquisition, JBA Computer Services, into a separate business unit to form Hall-Mark Global Solutions. It is this unit that focuses on distributing computer products. Hall-Mark Global Solutions has aligned its sales organization into five business units: one focused on Compaq; one on Hewlett Packard Co. of Palo Alto, Calif.; and one on IBM Corp. of Armonk, N.Y. The other two units are focused on software vendors, such as Oracle Corp. of Redwood Shores, Calif., and on information technology services.It is the Compaq unit that is dedicating a sales force to support government resellers. Why? Compaq asked for it, Freedman said.Compaq inherited the line of Alpha products through its $9.6 billion acquisition of Digital Equipment Corp. in June 1998. The problem was that Digital skipped distributors and sold directly to resellers and government customers. Digital did not permit its federal resellers to go through a distributor. Compaq, for the most part, relies on distributors, so it needed to find a distribution partner to support its reseller customers on the Alpha line, Freedman said. Teaming with Hall-Mark is expected to fill the void."I'm thrilled they have a focus on the federal marketplace," Newgaard said. "It adds value to Compaq Federal, and shows their commitment."Freedman declined to disclose revenue for the unit of Hall-Mark focused on Compaq products. He did say that the company has sold products to the government for many years but never in an organized way. Freedman estimated about 10 percent of the company's revenue last year came from federal, state and local government customers, and he expects that number to soar to 35 percent, perhaps higher, in the next 12 months, because demand for Compaq's Alpha products in the government is so high. "Compaq could keep us busy for the next 99 years," he said, noting that the IBM or Hewlett Packard divisions could pursue the government market as well, though there are no plans to do so as of yet.Government reseller customers of Hall-Mark's include Scientific and Engineering Solutions of Annapolis, Md., DLT Solutions Inc. of Herndon, Va., as well as integrators like Computer Sciences Corp. of El Segundo, Calif.Freedman said the government unit has six full-time employees, and he expects that number to double in the next year. XXXSPLITXXX-Hall-Mark Global Solutions, Tempe, Ariz.: A business unit of Avnet Inc., a Fortune 500 companyBusiness: Distributor of enterprise computing products, software and servicesProjected 1999 Revenue: $1.4 billionOperations: Australia, Austria, Canada, the Czech Republic, Germany, Hungary, Poland, Switzerland, the United Kingdom and the United States.