Dell Vs. HP: Who Wins?

When Michael Dell said it was time to embrace the channel, I sat back and waited. As editor of CRN.com and ChannelWeb.com, I knew that story and CRN's exclusive interview with Michael Dell would get people chatting in the ChannelWeb community. And I wasn't disappointed.

LARRY HOOPER Can be reached via e-mail at lrhooper@cmp.com.

Of course, the story drew a lot of harsh comments from solution providers. Michael Dell has been trash-talking the channel for 23 years, so a change in attitude is bound to elicit a little skepticism. Indeed, looking at the comments posted on ChannelWeb.com, Mr. Dell has his work cut out for him to prove his commitment to the channel.

But the more interesting comments were on a related story in which Hewlett-Packard Chairman and CEO Mark Hurd shrugged off Dell's full-scale entry into the channel as insignificant.

Not so fast, Mr. Hurd.

Solution providers in the ChannelWeb community were quick to say that while Dell has served as a channel nemesis for years, HP hasn't exactly been the key to solution provider profits. As HP has trimmed costs to compete with Dell, solution provider margins on PCs have tanked, too, solution providers say. So, if Dell has a better offer, some solution providers are going to take a look.

The comments tie in to one of my favorite subjects: channel loyalty. Can a solution provider that has been selling HP desktops and notebooks for five or 10 years switch to Dell for a little more money? I sure hope so.

Vendors out there want to think they have a loyal bunch of VARs that will stick with them through thick and thin, but I hope it isn't true.

I know solution providers need to make money on value-added services. I believe that they need to make most of their money on value-added services. Relying on hardware margins for profits hasn't been the model for years. But if switching PC, monitor or notebook vendors can increase margins, why not do it?

I'm not recommending that everyone or anyone run out and switch to Dell. Personally, I have my doubts. I am going to need some convincing that Dell can play nice in the channel sandbox.

But if I were driving HP channels right now, I would be more than a little nervous.

What drives you, loyalty or margins? Let me know at lrhooper@cmp.com.