Dell Computer Corp. is stuck in a place that the company probably never thought it would be – right in the middle.The company has said it will continue to sell direct and they are also trying to recruit channel partners to boost its indirect business.
But the reality is that Dell will have to make a choice which way it is going to commit? A mixed approach will have them butting heads with the channel. Successfully committing to both the channel and direct sales will be tough, if not impossible. Just ask IBM and HP.
IBM has had to smooth out channel relationships many times over the past 30 years because it has taken business direct. HP has had its share of channel conflict during the Carly Fiorina years.
Dell will have to learn how to deal with channel conflict or be stuck in the middle between direct sales and channel sales and run the risk of not being successful at either.
The example of Steve Johnson of Optimum Technologies of Norcross, GA., (who has just sold his company to SoftChoice of Toronto) makes the point. According to Johnson, there have been times when he has unearthed a significant new business opportunity and devoted resources and money towards it and then Dell steps in with an unbeatable price and he loses that deal.
In the past, it did not matter because Dell was forthright with its direct intentions. So for partners it was tough luck. That is not the case anymore with Dell launching the Partner Direct channel program and its partner recruitment effort.
This new approach for Dell will call into question strategic alliances such as its EMC partnership. EMC does not have deal registration so Johnson is unable to lock down new business opportunities. Dell can offer EMC equipment at a better price than most local resellers.
Dell has called Johnson in an effort to recruit him. Johnson has told me that these Dell recruitment calls are a “pain in the tail.”
Dell is now stuck in channel conflict situations. Dell’s deal registration program is still not available in Canada. Avoiding channel conflict, while maintaining and growing key vendor partnership such as its one with EMC is going to be a huge challenge.
Just because Dell can offer better pricing does not automatically mean they should. In fact, it’s a huge risk since this sort of action doesn’t endear the company to the very people it wants to recruit.
Dell’s direct sales will have to give way to channel sales if Dell truly wants any success with its Partner Direct program. Dell must behave in a way that never competes against its channel partners.
Keep in mind that both Michael Dell and EMC CEO Joe Tucci have gone on record saying that direct will always be a major part of how they do business. But Dell needs to minimize or eliminate that commitment to direct if it hopes to effectively leverage the channel.