Reseller CDW upgrades abilities, ambitions

Company offers higher-end equipment and new expertise for selling complicated combinations of products.

CDW is kicking its high-end lineup up a notch.

The Vernon Hills, Ill.-based computer retailer, with modest roots in catalog sales, has been expanding in the last four years to sell more sophisticated computing equipment, such as servers, networking hardware and storage systems. While CDW isn't changing its emphasis on small- and midsize customers, it announced on Monday new expertise for selling complicated or customized combinations of high-end products.

Now specialists in areas such as telephony or security can advise customers on products and configurations, and about two dozen people in a new 8,000-square-foot facility can assemble and test the resulting combinations of hardware and software, CDW said.

"This facility allows us to do rack-mounted servers, high-end routers, and putting complete networks together," said Doug Eckrote, senior vice president of purchasing and operations at the company.

CDW also can install customer-supplied hard drive software, set up networks, and track product serial numbers and other asset particulars.

The computer retailing business can be tough; CDW competitor Micro Warehouse had struggled to remain independent, and CDW bought the company in 2003.

CDW's moves put it in greater competition with computer makers such as Dell that sell directly to customers and with "value-added resellers," or VARs, which often have local sales relationships.

Expanding to offer higher-end equipment and customized configurations is a fine idea, if it's done right, Forrester Research analyst Brad Day said. CDW has to make sure that it doesn't extend beyond its operating-system and configuration expertise--a "golden image" whose components are known to work well together. Beyond that, customers tend to prefer buying from a company with sophisticated services, he said.

CDW doesn't have unlimited expectations. For example, it doesn't expect to integrate new SAP business software with customers' existing computer systems or sell IBM's iSeries servers, Eckrote said.

Because CDW sends products to customers but not technicians, installation and support have to be handled differently, compared with direct companies or VARs. CDW sells its own support plans but also relies on equipment makers and third-party service providers, said Oren Hartman, vice president of national sales at the company. Installation at the customer site is handled by a network of business partners.

CDW had net income of $175 million on revenue of $4.7 billion in 2003.