Michael Dell: We 'Absolutely' Would Like To Do A Deal With CDW

Dell CEO Michael Dell said he would like to establish a partnership with CDW, long considered one of the most widely respected national solution providers.

"Absolutely," said Michael Dell in an interview with CRN when asked if he would like to form a solution provider partnership with CDW that would put Dell systems on the CDW line card. "You know, in fact we do some business with them. I mean, you know, as we acquired one, two, five, 40 different companies, we have ended up on their line card."

As to why CDW has not formed a relationship with his company, Dell replied. "It's their choice. Not ours."

[Related: CRN Exclusive: 30 Tough Questions For Michael Dell]

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CDW, an $11 billion IT powerhouse with a product portfolio consisting of more than 100,000 products from more than 1,000 IT vendors, had not responded to a request for comment at press time.

Vernon Hills, Ill.-based CDW has a strong solutions business that ranges from small and midsize businesses to large enterprise customers and government and health-care customers.

Establishing a solution provider partnership with CDW could drive dramatic sales gains for Dell given CDW's sales muscle and its customer footprint. CDW has more than 1,700 field sellers and technology specialists and a customer base of more than 250,000.

Dell Chief Commercial Officer and President of Enterprise Solutions Marius Haas said he is baffled as to why Dell has not been able to establish a solution provider partnership with CDW.

"We believe we have a great value proposition for the partner ecosystem," Haas said. "We have done a lot to make sure that we can keep improving that engagement model. We still have work to do. We know that, but the feedback we are getting is partners are excited, motivated and the business results we are achieving together [are] rewarding for [us] and them.

"It baffles us when you have certain partners that don't understand or don't proactively want to engage or even reactively want to engage," added Haas. "I am not sure what the agenda is, but we say we are open for business and customers are looking for Dell [products and solutions]."

Dell in some cases is achieving triple-digit sales growth with national solution providers such as Insight, PC Connection, Zones and SHI, said Haas.

"These are fantastic partners that I meet with personally," he said. "They are excited. We are excited. They are growing. They clearly see the opportunity and are embracing [it]. It is exciting times."

Martin Wolf, president of Martin Wolf M&A Advisors, Walnut Creek, Calif., one of the top channel investment advisory deal-makers, said he is not surprised that Dell would like to sign a deal with CDW.

"Everybody wants to do a deal with CDW," said Wolf. "Get in line. How is Dell any different than HP to CDW? They are the exact same. CDW is better at what they do than HP and Dell in the areas that they overlap. They are better, faster, cheaper, period. Their financial performance is the best."

Dell rival HP, in fact, is one of CDW's largest vendor partners. Sales of HP products represented approximately 20 percent of CDW's 2013 net sales, according to CDW's 10K filing with the U.S. Securities and Exchange Commission.

"There is no doubt Dell is leaving tens of millions in sales on the table with CDW," said analyst Roger Kay of Endpoint Technologies Associates. "But if you're CDW, why would you want to do business with your best customer's worst enemy?"

Given the low gross margin in client devices, the value CDW is driving with regard to the customer experience can be regarded as more valuable than the IT products themselves from vendors such as Dell and HP, argued Wolf. "CDW is better at customer experience," he said.

STEVEN BURKE contributed to this story.

PUBLISHED SEPT. 8, 2014