Can Dell change its stripes?

Some people say it’s impossible for a tiger to change its stripes. But Dell is attempting to do just that, and its biggest challenge will be convincing the channel that those stripes are now spots.

For 23 years, Dell has been known for its direct approach to the market and its ability to go straight from the manufacturing facility to the customer. But now the company is adding a channel element in the U.S., putting it in the unenviable position of courting VARs it used to compete against.

There are several reasons for this change of strategy. Dell has faced declining PC sales in North America, and is now neck-in-neck with HP (and behind HP in other regions around the world). Being a price leader is no longer enough, since the PC is now a commodity and other vendors are offering the same thing.

Then there’s the rather sticky situation where New York State Attorney General Andrew Cuomo is suing Dell over consumer complaints that the company engaged in deceptive financing practices.

So is the channel a panacea for all that ails the computer giant? Dell says the channel offers a growth opportunity for the company, recognizing that partners can wrap services around products to make hardware more enticing. While Dell has informally worked with solution providers in the past, some possibilities for a more formalized relationship could include a definitive channel program, deal registration and even an authorized logo.

But Dell will, no doubt, come up against resistance from channel partners after years of competing with them. And that perception – that Dell is a competitor – will be its greatest challenge.

Interestingly, Dell doesn’t plan to go through broadline distributors, and instead will work directly with partners (though it has informal relationships with Tech Data and Ingram Micro). Some critics feel this arrangement will take business away from the distributors. If, however, Dell had the distributors on board, it might make some resellers feel more at ease.

On various blogs and message boards, channel partners have expressed their concern – and in some cases optimism – about Dell’s new strategy. Some worry that selling a Dell box will undermine their own white-box business. Others are concerned about providing Dell with customer information after years of competing with the vendor. And some see it as an opportunity to bring in new business.

But Dell is still working out its indirect strategy, so nothing is set in stone. After all, the vendor that evangelized direct sales for the past 23 years is now changing its tune, which means anything is possible.

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Jim Love, Chief Content Officer, IT World Canada

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Vawn Himmelsbach
Vawn Himmelsbach
Is a Toronto-based journalist and regular contributor to IT World Canada's publications.

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