VARs: Users Will Decide Dell's Future

With Dell ready to recall some 4 million notebook batteries—one of the largest recalls in history of consumer electronics—the question is whether the channel that the vendor has so often disparaged can capitalize on the situation.

The answer, according to several solution providers, is that the user will have the final say in the matter. And so far, solution provides tell The Channel Insider, the recall doesn't look like it will hurt Dell too much or present opportunities for the channel to take advantage of it.

"I don't really think this will affect them," said Darren McBride, president of Sierra Computers in Reno, Nev.

"I don't think it's a black eye so much. It's not a major quality defect as long as users get the battery replaced. I also don't think it a huge opening for the channel, unless you've already had previous problems with Dell and this is the last straw."

Dell has had a rocky relationship with the channel, but the No. 1 direct-selling PC vendor has managed to thrive by providing low-cost desktops and notebooks directly to end users.

But despite the company's oft-repeated assertions that the direct model is best, about 20 percent of its sales are believed to be generated by channel companies, individual users and small and midsize businesses.

True to its official model, the Round Rock, Texas-based vendor, which announced the recall Aug. 14, has started a direct recall of the batteries.

Click here to read more about Dell and the channel.

How the recall will ultimately affect the company won't be known for some time, but the reaction with VARs was much the same: Users will decide.

Like a lot of other people, Evan Leonard heard about the Dell recall on the 11 o'clock news.

It was a bit of a surprise for Leonard, the president of CHIPS Computer Consulting in Long Island, N.Y., and a Dell reseller.

The next day, Aug. 15, Leonard held a meeting with his sales staff on how to handle the recall, but by mid-morning, there were not many calls from customers about it.

"I think we'll see what the reaction is in a couple of weeks," Leonard said. "When it comes time to order more equipment, a lot will come and start asking your opinion."

Leonard plans to track down customers that have been sold the Dell notebooks that have the faulty batteries and then send out an email that will notify those users.

Tiffani Bova, channel research director at Gartner, said this type of recall could happen to any larger vendor.

The key to a successful recall, she said, is the communication between the VAR and the vendor, as well as communication between the VAR and the user.

Since Dell has had past difficulties with the channel and its partners, Bova said this might prove an opportunity to reshape its reputation.

After hearing about the recall, David Hudgins, president of PC Products and Services in Greensboro, N.C., said that resellers should take advantage of the news and push other desktops and notebooks like Hewlett-Packard or Lenovo.

"I see it as a really big issue; a smart reseller can take advantage of it," Hudgins said.

The problem is, according to Hudgins, is that the SMB users will most likely not take advantage of the recall or react strongly to it since the cost of buying the laptop was relatively cheap.

Click here to read more about problems Dell had with its motherboards in 2005.

"Unfortunately, the public has a short memory, and so who's to say that this will have long-lasting effects," Hudgins said.

If there are changes, Hudgins sees them coming from large businesses and enterprises.

He also believes that VARs can point to the battery problems during their presentations and remind users the perils of buying cheap and cutting cost.

Click here for exclusive channel research from Amazon Consulting.