Dell And The Channel: One Year Later

The Challenges
And therein lies the rub. Dell is in the midst of perhaps the greatest challenge any company has ever faced in the channel. How do you win over thousands of solution providers who don't trust you and, in many cases, don't want to trust you? The answer for Dell may be as simple as this: one at a time.

Weeks before the Austin meeting with VARs, Michael Dell had visited Future Tech Enterprise's Long Island headquarters in Holbrook, N.Y. Why? The company's President and CEO, Bob Venero, had extended an invitation. That meeting was productive, Venero said, and he and Dell have had a continuous exchange ever since. Dell even sent a text message asking Venero what he thought of the EDS and HP merger. "That's cool," Venero said.

On-site visits, invitations, text messages, all coming from the man who made his fortune competing against solution providers, often by dismissing their very worthiness while doing so. It's a tricky strait that Dell must navigate. On one hand, the company's whole reason for being is direct. On the other, Dell himself admits a great deal of the vendor's future growth hinges on the channel.

Of course, many solution providers are still betting on an HP-IBM quiniela. And it goes beyond hating Dell for the sake of hating Dell. Aside from competing against the direct monster, solution providers cite concerns regarding product quality, serviceability, power consumption and software licensing when comparing Dell to other vendors.

"We haven't, and we wouldn't, [look at Dell]," said Jeff Albright, founder of Albright Consulting Services Inc., Evansville, Ind.

Albright, who counts midsize and enterprise clients as customers, has an eye on Dell but still feels its total value proposition can't match the other vendors, at least at the midmarket and enterprise levels.

Dell's marketing guns have historically worked wonders hypnotizing end users into thinking that price is paramount in an IT solution. Because of that, the vendor hasn't developed the right message—or technology—to help VARs solve complex business problems, Albright said.

"If a customer looks at just the purchase price, it's a tough sell [to beat Dell]," he said. "That's the struggle [we both face now]."

At the small-business level, it can get even more nasty. To many VARs, Dell will always be a four-letter word.

John Zammett, president of HorizonTek, a Huntington, N.Y.-based storage solution provider who counts himself as a Network Appliance loyalist, said Dell can't provide the close-up and personal service that he can. "We have no intention of partnering with Dell," he said.

Another solution provider, who attended the Austin meeting but didn't want to be named, said Dell still can't comprehend that a customer is willing to pay a little more for products in exchange for the value a solution provider can add. "It's like someone talking about the Grand Canyon when they've never really been there. It's hard to bring it to life," he said.

That solution provider recently closed a significant desktop deal with Dell, displacing HP in the process, but now he wishes he hadn't ever won the deal. "It's a 3-percent deal and Dell is forcing me to take the credit risk on it. We couldn't stop it. We have to integrate the product, but we got bupkis from Dell on it," he said. "Three friggin' points."

Next: Grass-Roots Approach