Channel Friend Or Foe: Dell's ASAP Acquisition Heats Up Debate


The issue of whether Dell is a channel foe or friend came to the fore once again Thursday as the direct marketer kingpin that paints itself as a born again channel player agreed to acquire ASAP Software, one of the top Microsoft large account resellers (LARs) in the country, in a $340 million cash deal.

Buffalo Grove, Illinois-based ASAP Software, a subsidiary of Corporate Express, ranked number 47 on this year's VARBusiness 500 with $1.5 billion in annual sales, up seven percent from $1.4 billion in 2005. The shares of Corporate Express were up seven cents in mid-morning trading to $13.66 on the news. The Dutch-based Corporate Express is an office and business product supply conglomerate.

Solution providers said the deal gives Dell more software licensing reach and muscle that could mean more intense competition for them or a potential olive branch to work more closely with it in ASAP accounts. They said that will depend entirely on whether Dell deals with VARs as partners or foes in those accounts.

Dell, one of the top Microsoft LARs itself, often offers more aggressive software licensing terms and conditions than VARs or other LARs. For example, Dell last month rankled some Microsoft VARs by reselling Microsoft Open License software at cost as part of a three-week promotion that ran until the end of July. That direct entreaty to businesses had Dell offering the at-cost license on Microsoft products such as SQL, Exchange, Office 2007, Windows Vista, Windows Server Standard, Small Business Server, Client Access Licenses, Project and SharePoint.

Tracy Butler, president of Acropolis Technology Group, a St. Louis Microsoft partner, said the deal makes it less likely that he would partner with ASAP. "I have never used ASAP and I wouldn't use them in the future," he said. "I wouldn't use any Dell-owned company unless I had to as an absolute last resort to meet the needs of my client."

As for Dell's born-again channel claims, Butler said he is unconvinced. "Dell can't talk its way out of something it has gotten itself into over many years," he said. "They have acted anti-channel for such a long time that saying they are embracing the channel doesn't cut it for me, nor will it ever."

Butler said only a small part of his business is related to software licensing. "Software licensing margins haven't been around for a long time," he said. "We facilitate software licensing as a service to our clients, but don't see it as a profit center." He said his biggest concern in dealing with LARs is finding one that he can work closely with to support his customers.

Butler said he is far more concerned about Dell's acquisition of managed services platform provider SilverBack Technologies than the ASAP Software deal. Dell's announcement two weeks ago that was acquiring SilverBack, which partners with about 150 VARs, sent shockwaves through the channel, raising fears that Dell would use the technology to aggressively sell remote network services directly to small and medium businesses.

NEXT: A sign Dell is getting closer to the channel