Is The Dell Channel Born Again?

"That is bull," said Jay Tipton, vice president of Technology Specialists, a Fort Wayne, Ind.-based solution provider. "They are starting to realize they need the channel, and the channel is rejecting them. I wouldn't be too surprised if they started buying some VARs and pushed them to sell Dell."

Technology Specialists is winning more deals against Dell than ever before because of the computer giant's service problems, Tipton said, adding that Dell's low-price strategy has played itself out.

"You can offer the lowest prices without all the training and services. It doesn't mean you are better. Dell is hurting for sales, and Wall Street is getting on their case. I could care less."

David Chang, president of Agama Systems, a Houston-based system builder, said he's not sure what the memo indicates about Dell's intentions.

"Based on the last 20 years, maybe it's smoke again," Chang said. "They've put out trial balloons, but they've never committed to the channel at all."

Dell's challenges in building a channel sales effort would include rules of engagement and pricing, he added. "Dell is not going to give up the direct channel at all, so how are they going to price [indirect sales]? Will there be no room to give the reseller any margin to promote the product?"

Dell's comments in the memo paralleled remarks the company has been making since last September, when executives spelled out their plan for "Dell 2.0," a strategy that called for new supplier and partner relationships and a new approach to reaching customers.

After Michael Dell replaced Kevin Rollins as CEO on Jan. 31, he issued a memo to employees days later that reiterated much of that strategy but said it was a mistake for the company to pare its consumer sales efforts.

But the messages have, at times, been mixed. Last month, Dell confirmed to CRN that it had decided to pull the plug on plans for a retail store in a New York-area mall, after touting that plan just months earlier. And over the past several months, sources have told CRN that Dell has threatened some VARs with removal from its authorization list, while other VARs have told CRN they have received eye-popping discounts from Dell to win certain accounts in competitive engagements.

"They seem confused," said one channel source, who regularly competes against Dell in commercial and government bids in North America.