Microsoft And Dell

Given the changing dynamics of the market and the business solutions being provided by system builders compared with Dell&'s “Crazy Eddie” approach, Microsoft would be wise to re-evaluate that pricing gap. Kolb, of course, won&'t talk about whether the pricing gap is narrowing or widening. But from talking to system builders, one suspects there has not been a big change over the past several years.

Steve Plotz, president of Computer Systems of Tampa, Fla., for one, believes that Microsoft should go to a tiered rebate system for system builders that would shift the balance a little bit. System builders like Plotz are not asking for the same pricing as Dell. But they are asking for equity and fairness that has not existed in this marketplace for some time. Plotz says he pays $141 for an XP Pro from his distributor and cannot figure out for the life of him how Dell can sell an Intel Celeron D-based PC with XP Home Edition for $249. That Dell system in question comes with WordPerfect&'s word processor.

Looking at the approaches Microsoft is taking with its “buy local” program (offering local buyers complementary airfare, Internet filtering and do-it-yourself legal advice), it appears more of a half-hearted gesture than a genuine commitment to system builder profitability. Microsoft knows it&'s not doing the right thing on the pricing front. But it is investing in the system builder channel in other ways so as not to invoke the wrath of Dell. What does that say about both Microsoft and Dell?

“It is going to be interesting to see if Microsoft does anything at all in terms of better pricing for us,” Plotz said. “Microsoft has a great product, and Bill Gates is one helluva businessman. I have no complaints about him, just about how he does business.”

What do you think about Microsoft and Dell? Let me know at (781) 839-1221 or via e-mail at [email protected].