Hey, Dell: Deal Or No Deal?

A chief executive of a VARBusiness500 solution provider says a Dell direct rep just undercut him on a deal for several hundred systems with a price quote for the client that stated simply: "Direct pricing only not applicable to reseller." This story is not unusual. What is unusual is that this notable piece of channel conflict comes six months after Dell founder and CEO Michael Dell proudly proclaimed the direct model is not a "religion" at the company. Maybe he should tell that to his direct reps.

STEVEN BURKE Can be reached via e-mail at sburke@cmp.com.

The VARBusiness500 CEO, who does not want to be identified, says his recent experience with Dell is just another one of many examples of a CEO spouting channel religion and not backing it up with aggressive enforcement in the sales trenches. "It's a classic case of no leadership at the top," he said. "Someone needs to be in the sales trenches saying, 'It's a channel deal because we're a channel company.' "

At the same time Dell is proclaiming itself channel friendly, it is desperately trying to fix a customer service problem that is pushing more longtime Dell customers frustrated with dealing with the company directly to turn to the channel. Case in point: Jim Loznak, vice president of operations and engineering for The IServe Company, one of the largest ISPs in the Midwest, placed an order for four workstations and one laptop two months ago and received six notifications of shipment delays and a lot of runaround and lost hours before getting the issue resolved.

At this point, Loznak has lost confidence in Dell and is planning to establish tighter ties with a solution provider. He says up until now, 70 percent of his orders have been placed with Dell direct and 30 percent with resellers. He plans to flip that completely and now place 70 percent of his orders with a reseller. And guess what? Loznak says he is open to looking at Hewlett-Packard, IBM or a competitor's equipment. Given all his lost time and productivity, including what he estimates is 40 hours of his own time trying to get the issue resolved, Loznak is willing to pay more to get better service. What really burns Loznak is the lack of communication from Dell. Ironically, it's the same issue Dell faces in the channel.

If Michael Dell is really serious about building a channel, he'd better start communicating both with his own internal reps and solution providers. Dell's silence is deafening.

What do you think the real deal at Dell is?
Comment below or let me know at sburke@cmp.com.