Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

The company that has been giving the resellers, VARs and every PC manufacturing company fits and starts for the last 20 years appears to have a chink in its armor after all. Dell has made a living out of being more of a box pusher and highly efficient distribution machine than a cutting-edge technology company. Its low-cost distribution and highly customizable customer service model has cost many hardware-focused resellers that never adopted a services strategy their businesses.

For the past 20 years Dell has also beaten other PC vendors into submission. Compaq is no more, as well as a ton of others such as AST, ALR and Leading Edge. It has also caused HP and IBM to lose money hand over fist for years trying to compete. The edge Dell had is that it was more a distributor and a channel in and of itself and didn’t carry around the expensive baggage and inefficiencies of a hardware vendor.

But is the tide turning? Have HP and IBM (now Lenovo) finally figured out that the PC business is about adding processing power and reliability? Have they learned that VARs and resellers really don’t care about the margins on PCs anymore because there are none and they have already migrated to a services approach that many times doesn’t even have a hardware play?

If you look at the latest financial results, one may start thinking along these lines. While Dell has warned that its third-quarter results are expected to come in at the low end of previous forecasts because of a disappointing U.S. consumer and U.K business, Lenovo said its second quarter revenue jumped 404 percent and attributed most of that hefty growth to organic growth and its acquisition of IBM’s PC business.

At the same time, HP has been “doubling down” and working hard to strengthen its relationships with its channel, and that move will pay off in terms of bundling PCs into higher-margin services sales.

So has Dell finally hit the wall? Have PC prices come down as low as they can? Can there be no more efficiency gained through its manufacturing/distribution model? If I were a former reseller that was pinched by the Dell model, I wouldn’t be jumping in the streets just yet. This is not the beginning of the end of Dell, and although there does seem to be a small chink in its shiny armor, a little spit and polish will wipe it off quickly.

VARs seem unfazed by Lenovo-Office Depot deal. Click here to read more.

“The problem with Dell is Dell,” said Benny Lorenzo, portfolio manager at Aspira Capital Management. “In other words the company has gotten complacent. After so much success for so long, it now finds itself competing not against IBM, which never considered PCs strategic or ever figured out how to make money with them. It is competing against a rejuvenated HP, a low-price threat in Acer, not to mention Lenovo and a resuscitating channel-centric Gateway,” he said.

Lorenzo went on to say the model that made Dell successful in the past is no longer valid and I agree. “Dell has unexciting products at higher prices than the competition,” he said.

Now this isn’t a catastrophe and can be fixed. But it can’t be ignored.

Dell needs to realize the threat coming from Acer and Toshiba is real and that HP’s channel strength is just that, strength. And while HP’s and Lenovo’s channel model adapts well to an overseas environment where regional distributors and resellers rule the roost, Dell has never really figured out how to mirror its model outside the U.S. This is perhaps its biggest issue.

Competition is tougher in the PC realm than it has been for years. Dell needs to refocus and redevelop exciting products and leverage the channel better for enterprise accounts and overseas expansion. Otherwise, the chink in the armor could turn fatal, but I wouldn’t count on it just yet.

Elliot Markowitz is Editor-at-Large for the Channel Insider. He is also Editorial Director of Ziff Davis eSeminars. He can be reached at elliot_markowitz@ziffdavis.com.