Dell Faces Tough Challenge

Dell will have to conquer a mountain of skepticism and distrust as the vendor prepares to formalize its relationship with the channel.

Dell’s new channel chief, Gregory Davis, got a taste of the challenge during an appearance Sept. 19 at Channel Summit, a one-day solution provider event organized by Ziff Davis Enterprise, which publishes The Channel Insider and eWEEK.

It was clear from comments made to Davis while he was on stage, as well as remarks in casual conversations during the event, that many solution providers aren’t opening their arms to welcome Dell. And those who are keeping their minds open want strong assurances that Dell will be a good partner.

Until last spring, Dell, based in Round Rock, Texas, had proclaimed itself a direct-only vendor, bypassing distributors and solution resellers to get its products to market. Dell founder Michael Dell signaled a change in strategy in April 2007 when he said he no longer considers direct selling to be “religion.”

Since then speculation has run rampant about Dell’s channel plans, and questions abound over how serious the vendor is about the channel.

During the Channel Summit appearance, Davis was short on details, pointing out that he had been on the job less than a month. But he said a formal announcement of Dell’s channel plans will come by year’s end.

Davis said repeatedly that Dell’s job in relation to the channel is to “create great value,” and that as the vendor prepares its channel strategy, the driving principle is to keep it simple.

For the most part, the solution providers attending the session with Davis seemed willing to listen, and even one provider who said his company had lost a deal worth millions of dollars to Dell said everyone deserves a second chance.

Click here to read more about what Gregory Davis has to say about Dell’s channel strategy.

When asked for a show of hands from providers in the audience who were willing to work with Dell, a few reluctant hands went up.

Even when being challenged, Davis maintained his composure and repeated his “Create great value” mantra. He acknowledged that the vendor has some serious work to do. “I’m going to have to compete to win your business every day,” he said.

Davis pointed out that his main competitors weren’t at the event, while he put himself in the line of fire by attending. He didn’t name his competitors, but the presumption is that he was referring to Hewlett-Packard and Lenovo, which have very active channel programs.

That a Dell executive even attended a channel event is extremely significant. Dell executives wouldn’t have been caught dead at anything channel-related in years gone by.

And the channel has a long memory. Solution providers remember all too well the rhetoric used over the years encouraging customers to “cut out the middleman” by buying Dell’s low-priced systems. The vendor, nevertheless, was working with solution providers, though it didn’t have any formal channel programs.

Some providers are unlikely to ever do business with Dell, and they will be watching for any misstep the vendor might make to validate that decision. And missteps are a near certainty. Even vendors that have openly worked with the channel for years occasionally stumble, as we saw recently with Sun Microsystems.

Many solution providers, however, likely will give Dell a fair shake, despite the acrimony of the past. But the vendor had best prove itself a trustworthy partner, and quickly. The potential for channel conflict is enormous, considering Dell’s culture and aggressive sales staff.

Davis clearly understands the challenge he faces. He made a good impression at Channel Summit, so he’s off to a good start. Now he needs to capitalize on that good will by delivering a real channel program that protects the interests of channel partners as well as it does Dell’s.