Dell Fuels Loyalty Fires

Thank goodness for Dell. Like it or not, Dell's planned broad push into the channel has cranked up the debate on vendor loyalty. Should a solution provider dive deep and stick with one vendor through thick and thin, or cherry-pick based on customer preference and the margins on the specific products in a specific deal?

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

Loyalty has always been an important subject in the channel. Vendors want partners to commit to them and their product lines. No vendor CEO has been more vocal about that than Hewlett-Packard's Mark Hurd. That's what makes Dell's push so intriguing. No single company is more vulnerable to a successful channel effort from Dell than HP.

In an earlier column, I asked whether Dell could displace HP in the channel. Several of you wrote back with your take on vendor loyalty. But there was no clear winner in the Dell vs. HP battle.

Carol Shulman of Shulman Clark Associates said I had it wrong. The question isn't about loyalty to one vendor or another, but to the customer. Touch, Carol. Point taken.

Shulman said the solution provider will go for the best deal as long as the product best fits the customer needs. Still, without being beholden to one vendor, Shulman Clark's staff will rely on internal familiarity with a vendor. The staff is more likely to choose the product from a vendor they know and trust than to go with an unknown just to add a couple of points on a deal, Shulman said.

David Dadian of Powersolution.com was a bit more direct, if you'll pardon the pun. Dadian said that his company will never (emphasis his) switch to Dell for a few extra points of margin. Dadian said that while HP has had some issues in the channel, it has always had solid product quality. Reliable product is more profitable for VARs in the long term than a few extra points up front, Dadian said.

To that end, Powersolution.com chooses its partners very carefully, Dadian said. Still others said they just couldn't do business with a company that had built its business on berating the channel. And everyone who responded to my question made one crucial point: The days of relying on vendors for profits are over. Solution providers have to derive the bulk of their profits from the value they add and the services they provide in bringing a full solution to the customer. Who can argue with that?

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