Trust Us: Dell Says Direct Services Sales Won`t Hurt MSPs

By Jessica Davis  |  Print this article Print

The company recently shared its managed services direct pricing with its MSP partners in a move designed to ease their worries over commoditization and lower margins.

Ever since Dell first talked about its intention to sell managed services direct to customers, observers have feared that what happened to the PC space might happen to managed services and software-as-a-service (SAAS) markets.

After all, Dell's direct-sales approach is widely blamed for ruining margins and commoditizing the once-thriving PC reseller business. As the business changed, many VARs turned to services, in some cases offering managed services as a way to adapt to the new market realities.

With Dell now running a pilot of managed services sold direct to customers, many MSPs fear that their healthy businesses will go the way of PC reselling.

"I think it will drive margins down," says Lane Smith, president of DoITSmarter, a large Dell partner and a reseller of MSP services to other MSPs. His company is one of Dell's largest customers for Silverback, an MSP platform that Dell acquired in July 2007. DoITSmarter now competes with Dell in addition to being a Dell customer.

"The MSP market is really starting to take off right now," he says. "I would have liked to see it get two more years in it before the prices got pushed down."

Reassuring Lane Smith and so many other MSPs is part of the job of Dell's new director of SAAS and MSPs, Mike Menegay.  And it looks to be a big job. Menegay, former vice president of worldwide sales, services and the channel at Everdream, a recent Dell acquisition, says he's ready for it.  His roots are in the channel, having owned two VARs, run a channel-consulting company that prepared channel program launches for vendors, and worked as a channel executive for a number of vendors. He is currently in charge of MSP and SAAS services for both direct sales and the channel at Dell.

Menegay spoke with Dell MSPs during a webinar May 1 to update them on the direct managed services program and reveal Dell's direct pricing to customers.  The webinar was designed to ease worries, and he believes that for the most part it worked.

While Dell declined to reveal the pricing Channel Insider, Menegay says that the approximately 80 MSPs who attended the webinar and heard about the pricing believed that they would be able to compete with it. Dell says it will make some of those MSPs available to speak with Channel Insider in the days ahead. DoITSmarter's Smith was unable to attend the webinar.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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