Should Dell Court Distribution?

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In its push to expand its channel presence, would Dell be successful using two-tier distribution?

It might not be so easy. Some solution providers think that having a go-to distributor will make the transition easier for both Dell and VARs, but others think Dell has done too much damage to its relationships with the channel for distributors to remedy.

The Round Rock, Tex.-based vendor already has relationships with some distributors and sources products like peripherals and software licenses from broadline distributors Ingram Micro and Tech Data but neither distributor would say whether carrying Dell's products for resale to its customers was of interest or if they've had conversations with Dell on the issue.

On one hand, wooing VARs through distribution might help Dell break into new markets.

Larry Levy, president of LevyNET, Jacksonville, Fla., pursued a partnership with Dell several years ago but wasn't able to sell enough product to work directly with the vendor.

"I've re-sold some Dells in the past, but was just talking to whatever sales person happened to answer the phone. He'd give me a better discount than what you'd be able to get online but it's not something that we've pursued," said Levy.

Being able to get Dell products from distributors, he said, would open the door for him to sell the lower-end machines.

"We don't generally compete in the lower-end market for the $400 computers but it would open up that market for us. We get a lot of walk-in traffic and residential customers. It would be just one more opportunity. We sell a lot of Acers and IBM's right now but having the ability to purchase Dell through the channel would add just one more product that we could move," he said.

David Dadian, CEO of Powersolution.com, HoHoKus, N.J. said Dell would have to go through distribution to break into the channel in a meaningful way. "I don't know how Dell is going to do this," he said. "They've tried this at least two times before, and maybe the third time is a charm. They have to tread very, very softly on how they approach the channel."

Kurt Broski, CEO of solution provider Entr Computer Solutions, Rockford, Ill., it would depend on what kind of deal Dell struck with distributors before he would consider adding the vendor.

"They would have to put a lot of thought into it If they did it in such a way that they were still cheaper than HP, which they usually are, if they're still cheaper than them if they let us service the product I think they could have some merit," he said.

"Obviously have to overcome some animosity because they've been the bitter enemy for so long. When they're on your side they're not so bad I imagine," said Broski.

He thinks Dell could best reach the small business market leveraging VARs, but that pricing needs to be consistently lower for resellers than for direct customers buying online. Broski would also want assurance that his company would be responsible for and get the revenue generated from servicing Dell's products.

NEXT: Can Distributors Heal Old Wounds?

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