While it’s always difficult to gauge what’s happening inside a private company, one thing that is clear for Dell is that the company is highly committed to gaining market share before and after its merger with EMC. The question most solution providers are struggling with is figuring out the degree to which Dell may be successful with that effort.
On one side of the equation, there is apparently a leaked internal memo that suggests Dell is not meeting all its financial goals. The memo suggests that mixed financials resulted in the company’s not achieving the earnings and revenue targets attached to the Dell incentive bonus plan. Dell opted to pay those employees 75 percent of that bonus plan anyway. In some quarters, that memo may be interpreted as cause for alarm.
It should be noted that Dell was internally reorganizing its sales force for much of that period. However, Dell Channel Chief Cheryl Cook noted that the company’s channel partners registered 94,000 deals in the fourth quarter, a 19 percent increase year over year. Rebate payments to those partners are up 50 percent in the fourth quarter, as well. Cook also reports that Dell added 2,500 new customers in the last year, with 42 percent of them coming via the channel.
Furthermore, Dell is increasing the backend rebates for certain classes of data center products by 15 percent after already making some $5 billion in financing available to partners to help close those deals, Cook said.
The irony of all this, at least for the moment, would be that these numbers suggest the Dell channel is outperforming the internal sales staff. Of course, Dell is now providing more incentives to the Dell sales staff to drive deals through the channel.
Less clear is the impact the pending merger with EMC is having on overall sales. While there will be plenty of issues to navigate once the merger is completed, many customers are currently waiting to see what products might be dropped or simply mothballed.
In the meantime, distributor Tech Data has named Sid Earley to head up a new Dell Solutions Group to help partners navigate the complexity of a merged entity that will consist of elements of Dell, EMC, RSA, VCE and VMware, to name a few.
Given the level of competitive ferocity that exists between Dell and rivals such as Hewlett-Packard and Lenovo, there’s no doubt that pricing is a major factor in the battle for IT infrastructure market share.
The challenge facing solution providers is figuring out to what degree they want to participate in that price war at the possible expense of not only the vendor’s profits, but also their own.
Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.