Dell to Distribute PCs through Ingram Micro, Tech Data

In another move away from its roots as a direct-sales-only company, Dell is making selected standard configuration desktops and laptops available through distribution partners Ingram Micro and Tech Data, the company announced today.

Dell’s global channel chief, Greg Davis, says the move is designed to speed delivery times to channel partners and their end customers who typically would have to wait between 5 and 7 days for their order to be configured and delivered.  With the new distribution deals, standard configuration products are available for delivery in 24 to 48 hours.

Channel partners have been asking for that faster turnaround time, Davis tells Channel Insider. Delivery speed is a place where Dell’s competitors, including Hewlett-Packard, Lenovo, IBM, Acer and Sony, have enjoyed an edge because they already go through distribution.

“Certainly it’s an opportunity to have the collective sales forces at Ingram Micro and Tech Data represent Dell to VARs, rather than sell against us,” Davis says. “…Where we believe we may have lost business in the past, we’ll now we have Dell products available.”

And Dell will likely benefit from having its selected products part of the line card at these distributors.

“Our [solution provider] customers have continually been asking us to sell the full solution to them,” says Ken Lamneck, president of the Americas at Tech Data. “Not being able to sell Dell was a hole in our offering.”

And while both Tech Data and Ingram Micro executives are quick to point out that the Dell deal will target untapped markets rather than seek to win market share from Dell’s rivals that are already sold through distribution, it certainly won’t hurt Dell’s market share ambitions to be on the same line card as competitors HP, Lenovo, Acer and Sony.

Lamneck says that Dell regards the distribution agreement as a way to recruit new VARs to its channel partner program, PartnerDirect. Davis says that Dell currently counts 15,000 VARs in the United States as part of its channel partner program, and 35,000 worldwide.

While Dell, Ingram Micro and Tech Data did not know the number of Dell channel partners that were also partners at Ingram Micro and/or Tech Data, the number is believed to be substantial.

Ingram Micro’s President of the North America Keith Bradley tells Channel Insider that Ingram Micro has identified a subset of VARs that have historically bought some product from Dell, and it will be targeting an initial marketing campaign at those VARs.

“Our telesales organization in Buffalo will be very busy  with that for the next few weeks.”

The initial deal calls for Ingram Micro and Tech Data to stock and sell 11 standard preconfigured desktop PCs and 3 standard preconfigured notebook PCs in Dell’s Vostro line of PCs. Davis notes that Dell offers several other standard products, such as printers and displays, that will likely soon become part of the offering at these distributors. Ingram Micro’s Bradley says his company already has Dell displays in stock.

Dell channel partners will still be able to choose whether to order through Dell or through distribution. Longtime Dell partner The I.T. Pros will likely continue to sell the configure-to-order products, says President Doug Ford, because customers his customers have not had a problem with the lead times. But Ford applauds Dell’s move because it gives him more flexibility.

 “Dell’s move to sell select small business products through distribution will make it easier for my inside sales representatives to place orders and shorten product delivery time to my customers,” says Ford, who also serves on Dell’s PartnerDirect advisory board. “We have a great relationship with TechData and Ingram Micro. I think leveraging these distribution channels is a move in the right direction for Dell.”

Dell’s longtime value proposition has called for configure-to-order products, ordered by the customer and delivered by Dell.  Dell formally added channel partners and retailers into the mix in the last two years. But while retailers got standard configuration PCs to sell, Dell’s solution provider channel partners still had to order the configure-to-order products, delaying delivery time to their customers. Yet, those same customers could order standard PC products made by competitors and get overnight delivery from distributors like Ingram Micro and Tech Data in many cases.

Davis called the move to distribution just another step in Dell’s evolving go-to-market strategy, a statement that echoes CEOs Michael Dell’s leaked memo of two years ago that first hinted at Dell’s plans for a formal channel partner program. In his April 2007 memo, Dell told employees that the direct model Dell had championed was a “revolution, not religion” and the company would take whichever route to market best served customers.

That best route now apparently includes IT distribution.

Dell’s new move comes at a time when PC sales are in a slump amid a deep recession, and when Gartner is predicting the steepest decline of PC sales in history for 2009 – nearly 12 percent. Dell has been taking action to address the challenges to its business model, through a reorganization that began in early January, an exploration of other businesses through acquisition , a refocus on services sales, and now the move to distribution.

Lamneck says Tech Data’s talk with Dell about the distribution arrangement predate Dell’s reorganization.

Since its announcement of PartnerDirect, Dell the company has shown that it is willing to listen to solution provider partners and re-evaluate and adjust its program to meet their needs.   The move to distribution may indeed be the next step in that journey.