Installed base sales, however, are weak. With those factors combined, Epicor lost just over $1 million, a sharp improvement from $6.7 million in red ink a year ago. However, revenue grew to $109.2 million, up 8.7 percent from $100.4 million in last year's corresponding period. One profitability problem was that gross margins dropped to 46.1 percent from 48 percent a year ago because of a sharp increase in sales of lower-margin hardware. Meanwhile, license fees hit $19.2 million, a rise of 9.3 percent from $17.5 million. License fees represented 17.5 percent of revenue and Klaus said he wants to see that rise to 20 percent. Klaus also spoke in detail about the growth of the company's channel as opposed to those webcasts in which he says Epicor is direct only. I like to think of the "Good George" and "Bad George". Maybe it had something to do with Everything Channel choosing his wife, VP Lorrie Klaus, as one of the top 100 women in channels. Whatever the reason, he said Epicor needs the channel because "the 2,700 people who work at Epicor cannot possibly expand the market" and he said he just finished the meeting with about 100 partners.