How Do I Make Money If My Clients Are Buying Dell Computers

Today, as a small to midsize VAR you're probably finding it more difficult to compete against the Dell Computers of this world. One such VAR choosing a new strategy in this chess game is Bruce Biondi, a partner in New York Computer Consulting, located in Woodbury, N.Y. New York Computer Consulting sells several major brands of computers, hardware and software, along with providing consulting services to his clients located in the New York City metropolitan area.

I caught Bruce the other day at a client where he was busy swearing at the hardware vendor for some oversight (don't we all). When I inquired as to which vendor dropped the ball, I was surprised to find him working on Dell equipment.

Actually, surprised is an understatement; I almost fell off my seat. Bruce doesn't like Dell, because the vendor eats into his bottom line. "It's tough to sell against Dell," said Biondi. When asked why he was working on Dell, he replied, "The client wanted Dell, and purchased Dell. While I'm not happy about it, I figured I could still make money here..."

For years you've been a reseller of other major hardware and software brands. Now you find that your vendors are starting to sell to your customers directly, either by traditional mail offers or now on the Internet. In fact, VARBusiness' Annual Report Card (ARC) data found 38 percent of ARC respondents in both the clients and servers categories sell Dell. Of that, 37 percent of their systems sales are Dell. Obviously, although Dell swears otherwise, some channel interplay is going on. How will you make money?

Alas, you're asking the wrong question! It's not "How will I make money?" but "how can I turn this to my advantage?" Have you really lost that extra income? Not really! At least in the long term.

First, you're not involved in a bidding war. Face it: You've lost that battle. It's really difficult to make money selling against these guys. Still, the war isn't over.

Yes, you've lost 15 to 30 percentage points you would have added to that sale. However, look at your bottom line. Your company shortened the sales cycle, the purchasing cycle and the customer inducement cycle. This is saved money: You have gained time that could be used to go after additional clients. And, at least in the area of clients, you've gained a reliable partner: In 2000, Dell placed first in the ARC client category, just ahead of Apple and Compaq.

So, now you can focus on selling consulting services and negotiate a contract based on factors that you control. Here is where you tell your client, just as Bruce Biondi did, that it will still need to set up the computers. They'll need to be properly integrated into the network.

They need you, the VAR to configure the software, the tape backup, and all the other pieces of the puzzle we take for granted, before their new system will work. In fact, we, the VAR, have to set-up everything we wanted to sell them in the first place. So really, there's no loss, because we weren't going to make money from the sale of computer hardware. (Remember, the customer bought from Dell.) Nevertheless, they rely on us to install, maintain, and interact with Dell Customer Support. We win in the long term.

While waiting for Bruce Biondi to pick up the phone the other day, I heard on his "on-hold advertisement tape" that New York Computer Consulting now sells Dell Computers... checkmate!