The IT industry’s biggest distributors have found a new weapon in their war for the business of resellers: extended warranties.
This week Tech Data Canada began offering its partners the ability to sell customers three year extended warranties on brand name or white-box hardware.
an untapped territory,”” said TDC president Rick Reid, noting only 30 per cent of technology products are sold with extended warranties. “”It’s a new business opportunity for our partners.””
Called Protect-IT, the program lets VARs offer a choice of service plans, including onsite servicing, four-hour service, next business day service, express shipping and accidental damage protection.
The announcement comes three weeks after Ingram Micro revealed that it will offer similar extended warranty packages on brand-name products for its North American resellers, many of whom are also TDC partners.
It also puts both distributors in competition with extended warranty programs offered by major manufacturers, such as IBM, Hewlett-Packard, Cisco Systems and Toshiba.
Maintenance and repair coverage will be handled by authorized service providers within each distributor’s Canadian partner network.
Reid said this will meet complaints of some resellers who sometimes can’t find a local repair depot for traveling customers.
Tech Data Canada’s program is available immediately. According to Dave Walsh, vice-president of marketing for Ingram Micro Canada, its program is available now only to its Venture Tech Network and Ingram Micro Service Network members. The rest of its resellers will have it after the formal launch next week at Comdex Las Vegas.
“”By the end of this quarter it will be well in place, if not earlier than that,”” he said.
It isn’t clear how much take-up there will be because of the existing availability of OEM extended warranties. A sales rep at a Tech Data-affiliated Ontario networking VAR that sells top-line hardware, who didn’t want to be identified, was skeptical his customers would be interested. “”I can’t see how a third-party warranty could offer better service than a Tier 1 vendor,”” he said.
However, Roger Kent, a principal at Onix Lazer Corp. of Ottawa said some customers will be interested in a single extended warranty that covers all products on one invoice, compared to having to deal with separate added warranites.
Details of the Ingram program pricing are still being worked out. However, David Spindler, Tech Data Canada’s director of business development said Protect-IT’s fees are, like OEM extended warranties, based on product prices.
For example, a Protect-IT extended warranty with on-site next day repair coverage for a $2,000 laptop would have a reseller cost of $260 and a suggested price of $529. But VARs could sell for whatever they want, potentially increasing their margin on the extra.
Protect-IT will be a SKU in the Tech Data Canada product catalogue. Buyers will order it on an invoice and the distributor will include the documentation when product is delivered to the reseller. The buyer then activates the warranty online.
Both distributors have independent insurance companies backing the warranties.
One difference between the two is that Ingram Micro is administering its warranty program. TDC has struck a deal with Vancouver-based W3 Solutions, which has been in the warranty management business for 35 years according to its CEO, Scott Walker, covering everything from cars to home appliances.
W3 provides the call centre Tech Data Canada customers will use when calling for support, which offers product support and directs customers to service depots.
The deal with the distributor is its first, said Walker. Usually his sales staff of 18 deals directly with resellers. “”We’re trying to turn our distribution model upside down,”” he said.