Did Dell Stutter?By John Hazard | Posted 2006-09-12 Email Print
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After many years of dismissing the channel as a means to reach customers, the direct-selling PC king concedes it is considering alternate routes to market.
Direct sales remain the preferred route to market, but statements made by Dell executives at a meeting of analysts on Sept. 12, indicate the PC manufacturer is growing more flexible with age.
Dell executives reaffirmed their commitment to the direct sales model, calling it the company's "core" and "future" of the organization's go-to-market strategy, but Dell is also looking at other means, said CEO Kevin Rollins and founder Michael Dell.
"We're selling through several models," Dell said. "The vast majority of our customers are buying online. I believe, if you look back 5-10 years from now, the propensity for buying online will increase, not decrease. But that doesn't mean we won't experiment and reach out to other means to reach the market."
The statements came as Dell introduced "Dell, 2.0," an initiative to respond to customer needs, ranging from offering more energy-efficient hardware to empowering its technical support representatives to solve customer problems in a single phone call, that at its core tasks the organization and staff to re-examine business practices.
Part of the strategy is to shift the customer engagement from a transactional one to a relationship, where Dell maintains "lifetime" contact with the customer, and "the sales channel is a critical part of that experience," Rollins said.
Dell already has relationships with individual VARs through its Dell Solution Provider Direct program launched in August 2002 to provide volume discounts, but the company claims that the program is a mere source of product and not a partner program.
However, many VARs claim to be receiving direct support from the company, with some declaring it a better partner than their more traditional channel vendors. Analysts estimate that just shy of 20 percent of Dell's enterprise revenue is channel-borne.
But Dell has been reluctant to acknowledge the channel, likely because it makes them appear more valuable to Wall Street investors, analysts said.
The revelation of "Dell 2.0" and the statements made by Dell executives leave room for some to speculate.
"'Dell 2.0' is about packaging more than anything," said Ron Silliman, an infrastructure support services analyst at Gartner.
"They're basically pulling together things they're already doing and giving it focus It wouldn't shock me if, as part of 2.0 or 2.1, Dell made more use of the channel and owned that relationship it has denied so far."
"It might appear to be a sea change," Silliman continued. "But it wouldn't be a question of Dell doing anything it's not already doing. It would be announcing something they have pretended didn't exist."