Without A Channel, Dell Won't Be Lead Dog Again

You know the subject is coming up in the hallways of Dell. It probably is not being debated in the manner that it should be, however, because of the company's heritage. Or then again, maybe it is.

ROBERT FALETRA Can be reached via e-mail at rfaletra@cmp.com.

The question, of course, is whether the company should abandon its traditional "Be Direct" strategy and change to a more diversified and smarter strategy that includes a real indirect channel component.

There is little doubt that Michael Dell is fully re-engaged and driving the Round Rock, Texas, company once again. With the departure of CEO Kevin Rollins and many senior managers, Michael has stepped back in and assembled a new management team.

The company last week said it is moving fast to reshape itself. The question is, does Dell feel its trouble is a result of process failings, or is it a sales and customer execution issue?

With Hewlett-Packard humming on all cylinders and once again having overtaken Dell as the No. 1 PC manufacturer, there is more to righting the ship than meets the eye.

Dell benefited from the Carly Fiorina years at HP, when the Palo Alto, Calif., company was melding Compaq into its mix and there was confusion in the market as to whether HP wanted to be a direct or indirect seller of computer hardware. That debate is over.

Under HP CEO Mark Hurd, there is no more question as to the company's direction. As a result, the management team is able to focus and execute on its go-to-market channel strategy. In my opinion, it is doing a very solid job at that. While there will always be some issues and problems that need tweaking, HP will put some distance between itself and Dell in the coming year. Dell was never able to put distance between itself and HP when its competitor was struggling. Instead, the two kept trading the No. 1 position from quarter to quarter.

So the real issue is whether Dell will come to the conclusion that its direct-only strategy is limiting and that in order to compete with HP over the long term it must change its ways.

The reality is the channel doesn't need Dell. But I'm not so sure Dell can make the argument any longer that it doesn't need the channel.

There are millions of sales proposals made every day around the globe from which Dell is excluded because of its anti-channel approach. I wouldn't count the company out, but I do believe Dell will never be the force it was in the past unless it embraces the channel and at least decides on a hybrid strategy. In either case, I'm betting HP, arguably the most important company in the channel bar none, will enjoy the leadership role in PC sales for a long time. As for Dell, as the saying goes, if you're not the lead dog, the view never changes.

Do you think Dell should make nice with the channel?
Make something happen by contacting CMP Channel Group Robert Faletra at rfaletra@cmp.com.