Dell Canada is sticking to its direct strategy in this country even though its parent company shocked the IT industry by announcing it will enter the channel formally.
Greg Davis, president of Dell Canada Inc. of Toronto, said even though the subsidiary will remain direct for the most part they will work with channel partners. He said Dell Canada customers have asked the company to work with the channel and the subsidiary will respect their wishes.
“We are responding to customers and will work through integrators, service providers and in some cases VARs to provide Dell product to customers and we see an opportunity to continue to work with solution providers and the rest of the channel to provide great value to them,” Davis said.
Having said all that Davis added that Dell Canada will pursue business direct with “great vigor.”
Dell Canada has no plans to follow its parent company and develop a channel program or any other margin incentive programs. Davis did not dismiss the notion that these sorts of channel plans may one day be offered by Dell in Canada, but said there are no immediate plans for them nor has anything been tabled and there is no timeline set for an official Dell channel program.
Meanwhile, Dell’s U.S.-based plan will be called the Dell Authorized Partner program and contain standard reseller benefits such as deal registration, back-end rebates, online training, demonstration products and financing.
Rick Reid, the president of Tech Data Canada, said he is watching the Dell developments from the periphery. Dell is a customer of Tech Data in Canada. The direct vendor purchases peripherals predominately from the distributor, Reid said.
As Reid sees it, Dell is strong north and south of the border in large end user accounts and they do a good job with its call centre and Web site in the very small market place.
“However, there is a gap that is addressed very well by the reseller community and Dell has recognized they are missing out on that market. The 100 to 500 seat market, which is the heart of what our resellers serve. I am not surprised that Dell wants an opportunity at that market and the best way to get to those people is (through the channel),” Reid said.
Davis told CDN sister publication Computing Canada late last year that Dell Canada’s indirect sales is roughly five per cent. He said that he does not anticipate any dramatic increase in indirect sales.
“We have been growing our relationships with customers in the SMB. SMB is an area of focus for us and I do see an opportunity to continue that growth if we can do a good job with solution providers,” Davis said.
According to Reid, Dell going into the channel will be a very hard thing to do and something that cannot be accomplished overnight. He pointed to culture changes, system changes such as billing to resellers, tax implications, and returns as major hurdles for the Canadian operation.
Davis could not identify the number of solution providers Dell Canada has in the country because it does not have a formal program.
One solution provider who will not partner with Dell under any circumstances is Orbex Computer Group of Guelph, Ont.
Dwayne Mott, the president of Orbex, still remembers the commercials from Dell to cut out the middleman. He did not appreciate them then and still does not appreciate them today.
He found Dell’s new channel engagement strategy to be nothing new. “My perception is they are trying to re-brand a strategy that they went with a while ago, but are touting it as new in the hopes of getting some more excitement. We won’t be participating,” he said.
Mott does not trust Dell and cautions any other reseller when dealing with the direct vendor.
“We don’t have a relationship with them and have never been able to overcome the negatives they painted of our role in the technology ecosystem. A lot of what it takes to succeed in this industry is the confidence in the relationships you rely on when things go wrong in sourcing product, making it work or repairing a problem. We have a good to great relationships with our distribution and focus manufacturer partners. That allows us the communication channels to resolve issues in procurement or support. Throwing that away to build with Dell does not make business sense for us, even for an extra five points in margin (or whatever they are offering this time around),” Mott said.
Davis plans to avoid channel conflict by staying close to the customer and understanding who is best suited to provide the total solution.
He also does not believe Dell would have to increase partner margins substantially to build a base of resellers. “Ultimately it is the customer’s decision. It is what the customer is willing to pay,” he said.
Davis added that any new channel partners working with Dell will not be forced to hand over its customer list.
Davis also said he does not believe that the direct model has run its course and expects he can expand the business in Canada by being direct. The channel business will be complimentary, he said.
Davis would not comment on possible partnerships with distributors in Canada or a retail strategy that would see Dell products on store shelves.