Michael Dell: Channel Is On a $12B Run Rate


Dell has added more than 3,500 solution provider partners since the fourth quarter and its channel business is on a $12 billion run rate, said Michael Dell, chairman and CEO.

"In April I laid out long-term goals to drive shareholder value, including delivering sustained EPS growth and executing on our five core initiatives and also growing our retail and channel for scale and profit," Dell said in a conference call with analysts Thursday evening. "While I'm encouraged with our progress, we still have much work to do to restore our competitive position but over time I am confident that our broad, long-term goals which include our growth initiatives will drive growth in revenue, earnings, cash and ultimately shareholder value."

The Round Rock, Texas-based vendor launched its Partner Direct program in Europe and Asia-Pacific in the first quarter and continues to increase efforts to win over solution providers in North America. Last week, Dell held its first partner advisory council meeting and also launched a channel-specific blog. The company also announced the first two dates for its Future of Computing tour for solution providers in its PartnerDirect program.

Dell plans to host solution providers June 9 in Chicago and June 23 in San Francisco, according to Chris Bates, director of strategy for Americas Channel Group. More channel-specific events are expected throughout 2008, but dates and locations have not been determined.

"One of the key objectives for us this year is to reach out to partners and get solid feedback and continue to expand PartnerDirect. Last year, as we were putting the program together, getting face-to-face together was a critical component for learning what it's like working with Dell, what [VARs] would like to see us add," Bates said.

Meanwhile, 24 Dell partners met in Austin, Texas, last week for an advisory council meeting that included a 1-hour Q&A with Dell CEO Michael Dell.

The purpose of the meeting, Bates said, was to gather feedback about PartnerDirect from a variety of different partners, including storage specialists who came to Dell through the EqualLogic acquisition, managed service providers who came through SilverBack Technologies, as well as network security VARs and some companies that focus on very specific vertical markets.

"I think there are several ways to continue to solicit partner feedback. The plan is to continue those [council meetings] in the future," Bates said.

The partners on hand told Dell they liked the vendor's certification structure and managed services initiative and want Dell to leave room so they can add value to customers. "

Two solution providers who attended the advisory council meeting said they were impressed not so much with what Dell said, but what they asked.

"When I heard about [PartnerDirect], like the rest of the industry that's had any kind of connection with Dell, I was very skeptical. I've heard this before. It had always come with some constraints and restrictions that didn't make it a viable reseller channel program at all. I will have to say, I was pleasantly surprised after meeting in Austin last week," said Mike Collins, president of Mike CollinsAssociates, a Chattanooga, Tenn., solution provider.

In the meetings, Collins said there were as many Dell employees as partners in the room. Dell had people from many departments, including the direct sales side, in the room to learn about the channel.

"It was more about them listening to us. They did a brief introduction, opened up with a presentation and then after the first slide, it turned into a discussion," said Tim Hebert, president and CEO of Atrion Networking, a Warwick, R.I.-based solution provider. "They let the whole thing play out to get the feedback they were looking for. You had three or four people running it, but another 20 people were writing notes, listening. After the break, they were coming up to get more clarity and detail. They came across like they don't have all the answers."

Added Hebert: "The thing I was really impressed about, they're not making channel decisions in a vacuum. I've been in this business over 20 years. I've always seen so many manufacturers make channel programs in a vacuum of what it's really like from a reseller standpoint. For the first time in 20 years, I'm involved with a manufacturer that's not just doing it for show. To get the growth they want to be able to sustain, they're going to have to grow this way. They have to go through resellers."

For their part, Dell executives acknowledge there's still work to be done. The company is fighting a New York lawsuit that found the company to engage in deceptive business practices and many solution providers will always view Dell as a four-letter word. Channel relationships are likely to see more hiccups before being smoothed out, said Bates.

"It's a journey. And we are committed to enhancements based on partner feedback," he said.