DEC kicks off OEM market effort

Electronic News, March 16, 1992 by Howard Grund

MAYNARD, Mass. -- Digital Equipment Corp. has kicked off a new OEM marketing effort by enlisting Arrow Electronics to sell its SCSI disk drives.

As reported (EN, June 3, 1991), DEC last summer began setting up a new marketing unit charged with seeking OEM contracts for its components, peripherals, software and networking devices as part of an ongoing effort to open up new revenue streams to make up for sluggish computer demand.

The franchise was extended to Arrow/Schweber, the semiconductor and subsystems operation that sells to OEMs, as well as the Almas subsidiary in the northwest. Arrow has a traditional DEC systems franchise via its MTI Systems operation, which sells to end-users and is part of the umbrella Commercial Systems group.

DEC's other leading industrial distributors -- Avnet Computer, Wyle, Pioneer-Standard and its affiliated Pioneer Technologies group -- have thus far refrained from participating in the new OEM program.

"Avnet, Pioneer and Wyle could do this if they wish," said Ed Kamins, DEC manager of U.S. distribution. He acknowledged, however, "I haven't heard that they've had any interest in doing it."

Arrow and Almac have been authorized to sell two DEC SCSI-2 interface drives: the 5.25-inch 2-GB DSP520 and the 3.5-inch 1.05-GB DSP3105.

"Arrow is selling industry-standard, generic products," Mr. Kamins said, and "selling the components to other systems makers. It's not only a different product, but a different marketplace."

As for expanding the OEM distribution network, he commented "Right now it's the first and only franchise, and what could happen is an open question."

In addition to the SCSI (Small Computer Systems Interface) drives, the direct sales unit will eventually offer VAX processors and other semi-conductors, boards, thin-film heads, terminals and keyboards, he said.

Steve Kaufman, Arrow president, while acknowledging a generally distressed disk drive market in recent months, cited continuing steady demand for what he described as higher-technology drives, including the SCSI drives.

"The OEM (drive) market has not had the same kind of major glut and shakeout that the PC market has had," Mr. Kaufman said.

Another reason for Arrow to favor the SCSI franchise is that "DEC is a major partner of ours and they asked us to do something and we did it."

Referring to potential additions by DEC to its distribution OEM offerings, he said "If their strategy is to move additional products into the merchant market, then we would certainly look closely at that."

Asked about the new DEC program, Josh Napua, Wyle's executive vice president for computer products, responded "Yes, we discussed it" with DEC officials, but added "They have agreed that if we wanted to do the same thing (as they are doing with Arrow) that it would be available to us." According to Mr. Napua, "We're exploring the situation."

However, he said that Wyle was concerned that it already had a sufficient numbers of drive manufacturers on the linecard. These include Maxtor, Quantum, Fujitsu, Micropolis and Western Digital.

Mr. Napua concluded "This is a new market for Digital. They never thought about selling to the OEM market, and we're in kind of a wait-and-see mode."

Mr. Kamins said that Digital's goal is to remain a major computer manufacturer and that market factors had changed so that "You can't do that without being a leading manufacturer in components"