CDN / Video Streaming
MBX Systems Reinvents Itself In Computer Hardware Manufacturing
April 12, 2021 — Spencer SmithEditor, SearchITChannel
Twenty-five-year-old MBX Systems, a computer hardware manufacturer, is an example of how technology companies can continually adapt to the ever-changing marketplace.
In 1995, the organization started in the consumer space as Drive Express (later Motherboard Express), focused on selling technology components to enthusiasts building their own hardware systems. As the market commoditized, the company pivoted to building and selling systems, before seeing a need to pivot again as Dell and Gateway gained dominance. In the early 2000s, MBX Systems identified an opportunity in the emerging market for enterprise dedicated-use systems.
“We transitioned completely out of the consumer market and then into the enterprise market… We have been really focused in that area of dedicated-use systems since then,”
– Chris Tucker, president of MBX Systems
Since making the enterprise shift, MBX Systems has continually modified its approach to keep solid footing. Today, the company is pursuing a deep vertical market strategy and differentiating itself with manufacturing orchestration software it developed internally.
Responding to Changing Customer Preferences
In 2017, MBX Systems took note of a couple of market trends to which it saw a need to respond.
The first trend was its software provider customers moving toward alternative deployment methods, such as cloud computing, virtualization and containers, Tucker said. Customers had begun distributing their deployments much more broadly, making them less dependent on the hardware that MBX provided. As a result, MBX rapidly lost spending from “a decent portion” of its customers, he said.
The second trend was that customers wanted to consume data in a different way than before. “We were getting more questions, a higher expectation of information and a higher level of granularity” in the information requested, Tucker said. He noted that customers sought a level of transparency similar to what Amazon provides consumers, where an Amazon buyer can see each step of an order’s journey, from purchase to delivery. “People were asking for that same level of granularity from us as a manufacturer or integrator of products.”
Taking these trends into account, MBX retooled its focus.
Hardware in Search of a Market
The first adjustments MBX Systems made were to the customer segments it targets. The company started looking at market segments that require on-premises, high-performance needs, Tucker said. The investigation led MBX to zero in on niche vertical markets, ultimately choosing three to invest in: the video streaming segment of the broadcast market, flight simulation and physical security surveillance.
“Over the course of two or three years, we transitioned most of our business out of those traditional markets and into these markets where the hardware was still required,” Tucker said.
Tucker said MBX “took a very structured approach” to entering the vertical markets over a two-year period. In the first year, MBX focused on identifying and building the skillsets and tools it would need to target the markets and “gain interest in one or two banner accounts.” In the second year, MBX moved to bring those new customer accounts onboard and then leverage them to win additional accounts.
“Over the course of 24 to 36 months, we were able to swing our core business, which was our old traditional business, which was maybe 70% to 80% of our business typically … to where we have now flipped that on its head” in sustainable, vertical business, Tucker said.
He noted that MBX remains on the lookout for additional vertical markets it could expand its business.
Developing Hatch Software
MBX Systems responded to customers’ demand for higher levels of data visibility by creating a software toolset called Hatch. Hatch aims to provide customers with a hub for managing complex hardware programs, Tucker said. Customers can use Hatch for a range of functions, including customizing product configurations, managing engineering changes and tracking shipment status, according to MBX. Additionally, Hatch offers inventory management, work-in-process tracking and global compliance intelligence.
The introduction of Hatch “made a big difference” to MBX’s customer base, Tucker said. He added that the majority of MBX customers today use Hatch and the company is betting on the software to be its key differentiator among competitors. “When a customer or a prospective customer sees Hatch for the first time, you can see their eyes light up. You can see them understanding the problems that it is solving, and you can see them understand the labor and cost savings of this unit,” he said.
However, while ultimately rewarding, the release of Hatch initially posed challenges because it required MBX to expose almost all of its data to customers. “There is a reason that some companies don’t make the decision to open their kimono and share all the data. Some of the decisions that we made in doing that … exposed some of the warts that we had in our internal processes,” he said.
“Over time what it did was build trust, but initially [it] was difficult to expose some of the creaks and the strains of actual manufacturing,” Tucker said. He noted that with the data exposed, MBX works even harder to adhere to high standards.
Hatch has also helped MBX plant its flag in the vertical markets it targets. Tucker said customers in those verticals are receptive to Hatch because none of the other manufacturing players in those markets offer anything like it. “One of the reasons that we picked those markets is that they were really ripe for disruption,” he said.
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