Dell Says Channel Partners Like Alternative To 'Our Major Competitor'

With a business that's been losing market share and struggling to grow, Dell's top executive suggested Thursday the company is positioned to now win over channel partners who are looking for a top-to-bottom alternative to Hewlett-Packard.

Dell Chairman and CEO Michael Dell made the remarks in a conference call with financial analysts after the company posted its quarterly earnings. The Round Rock, Texas-based company has also told solution providers it is poised to make a major announcement next week on the future of its channel operations.

"The number of . . . resellers that add a lot of value in just reselling hardware is just not all that great," Dell said. "We're finding among this $9 billion Partner Direct business, a large number of partners who really aren't concerned that Dell also sells direct -- realizing our competitors also sell direct in one form or another.

"Many are quite excited to have the only full-line alternative to our major competitor out there," Dell said. While he didn't refer to that competitor by name, the company has been suffering at the heels of success registered by Hewlett-Packard.

The Number 1 PC maker worldwide is HP, Palo Alto, Calif., which, according to numbers released by research firm iSuppli on Thursday, continued to build a significant market share lead over Dell globally. HP first surpassed Dell in market share late last year and ran up a string of successes through its most recent quarter, when HP topped $104 billion in annual sales.

ASCII Group, the Bethesda, Maryland-based group of resellers and solution providers, is bucking the overall trend for Dell. Alan Weinberger, ASCII Group's Chairman and CEO, said business through his group to channel partners has been gaining strength.

"ASCII's sales with Dell have actually increased 10 percent year over year, ending September 30," Weinberger said in an email. "I know HP's sales have greatly increased in the aggregate is as you mentioned, but we do not have the support directly and only SYNNEX has been growing our HP sales during this period."

Dell's hopes with the channel may also be growing. In the earnings announcement for its third quarter of fiscal 2008, Dell reported its consumer business actually declined by six percent on a year-over-year basis. The company's bottom line also benefitted from the tax benefits generated by strength in its global business. And even though Dell CFO Don Carty announced Dell intended to resume its share buyback program after a year-long suspension -- a much-anticipated move by investors -- shares of Dell stock plunged on its earnings news by almost 10 percent in after-hours trading.

All this is happening as Dell's channel strategy is moving once again to center stage.

In an invitation, Dell told resellers it would conduct a "virtual Town Hall" meeting on Dec. 5, in a session to be conducted by Greg Davis, Dell's vice president and general manager for Americas.

"If you are interested in growing your relationship with Dell or curious about what Dell has to offer, this Live Meeting is one you won't want to miss," Dell said in its invitation to resellers. Dell executives have promised to launch a deal registration program for channel partners by year's end, as well as provide efforts to step up support for channel partners.