Dell Channel Chief: Despite Q3 Declines, Company Exceeds Goals With VARs

A day after Dell reported disappointing revenue and earnings figures, resulting in its stock trading down nearly 10 percent Friday, two of the vendor's senior channel executives spoke with CRN Assistant News Editor Scott Campbell about the results and Dell's solution provider program, nearing its two-year anniversary.

Greg Davis, vice president and general manager, global commercial channels, and Paul Shaffer, director of U.S. marketing and operations for Dell's global commercial channels, said the company is exceeding goals with enterprise-focused solution providers and expects SMB revenue through the channel to pick up after lowering the deal registration threshold last month to $15,000. The following are excerpts from the conversation:

Dell's sales fell 15 percent and earnings 54 percent in the third fiscal quarter. Within those results, how did your channel business perform?

Davis: We can't quote specific numbers, but we're very proud of the fact that the effort we put in place almost 2 years ago has continued to pay off for us.

In Q3, indirect global business was 26 percent of commercial revenue. When you look at the same business a year ago, it was 20 percent of total commercial business. We continue to meet our objectives, grow faster than the market, grow 2 times our direct business. A lot of that is having stayed focused on solution partners, especially those in the enterprise arena, focused on server, storage, and solutions like virtualization, consolidation and green IT.

We hit all of our goals. The team executed very well. As [CEO] Michael [Dell] said, the first three weeks of November have seen strength, improvement overall. We've seen the same strength and improvement in the channel business. We feel really good about the efforts we put in place.

How did North American channel business perform, compared to the global number?

Davis: In North America, we hit our top line number. What I can say is we performed top of our [goal] numbers in North America. We saw strength in midsize and larger partners in the quarter, the enterprise and EqualLogic partners overperformed our target. That's a good sign. We had 31 percent more partners selling EqualLogic in Q3 than in Q3 last year. I often get asked how EqualLogic is doing in the channel. That's a really good sign that the partner program is gaining strength and we're signing up new customers.

Are the new EqualLogic partners existing Dell partners who have moved upstream to sell the EqualLogic products or other storage VARs for whom Dell is a new vendor partner?

Shaffer: It's a mix of those. There are boutique channel storage partners to some larger players that were focused on Sun [Microsystems], NetApp or IBM in the past. We're making inroads in with those partners on a year-on-year comparison. That's largely tied to our Enterprise Architecture certification that leads for us.

If the enterprise side overperformed, does that mean the SMB lines didn't perform as well with solution providers? And if so, is that a case of the economy creating challenges or because you have more work to do with partners in those lines?

Davis: From a partner standpoint, our entire program has really focused on the enterprise. A lot of partners sell desktops, notebooks, but a significant focus of our investment and attention is around the enterprise. More than 50 percent of our registered deals are focused on enterprise products.

Shaffer: To add on to that, when we were lowering the deal registration threshold down to $15,000. We saw a 31-percent increase in deal registrations. We'll have more line of sight [to the SMB side] now going forward.

Next: SMB Products Come Into The Mix