Dell To Wall Street: We Want Strong Channel Relationships

At the company's headquarters in Round Rock, Texas on Wednesday, executives outlined Dell's channel strategy in the U.S. and abroad.

While in some emerging markets like Russia and India Dell has been using an indirect channel sales strategy, its U.S. and Western European commercial sales have long been a mostly direct game. Dell said that about 20 percent of its $53 billion commercial business went through the channel before its program launched in the U.S., and analysts wondered where Dell and its resellers could potentially come into conflict.

While Dell has no intentions of abandoning its direct business, business through the channel is growing at a faster rate and the company wants to catch that wave, Paul Bell, president, Americas, told analysts. But Bell acknowledged that Dell has been viewed with hostility by resellers in the past who viewed the hardware maker as competition.

"I think there is a very important element here of trust that starts with foundational elements and we're only going to earn that over time," said Bell. Dell's base of 30,000 resellers, with whom they partnered before the company's program launched, is evidence that its partners don't need to worry that Dell will take their deals direct.

Partners can have confidence in "the fact that we're not starting from scratch that there were all these partners out there that found out we weren't inherently conflicting with them, and we found a lot of win-wins even though we weren't bending over backwards to offer that to them. We have now codified and institutionalized things that we were doing with the best relationships informally and saying we are going to do more than just register a deal and protect you, we are going to invest in you," Bell said.

The company's new deal registration program will help partners feel more secure that Dell or other competitors won't be out to steal customers, he said. But a change of heart on the part of VARs is going to take time.

"It's not going to happen overnight. We have to build the trust over time. We think through understanding where the win-wins are, after over a decade of experience here, we can find places where they can prosper with us," he said.

In the year since Dell began formulating its channel strategy, Bell said he's seen channel partners slowly transitioning from animosity to acceptance and eventually interest in the company.

Greg Davis, vice president and general manager, Americas channel group, said that the program's elements, like deal registration, training and a partner portal, were in response to requests from VARs, and that the company has not yet succeeded in meeting all of its goals.

"We haven't been able to do everything that the channel has wanted. For example, we haven't been able to get all of the training done that partners have asked for," said Davis. "Our channel is thirsty for that information from us and we haven't been able to get that out to them yet, but its something we are going to do."

When asked whether Dell has its eye on partnering with DMR companies like CDW, Davis said Dell has been in talks with "almost every large partner in the U.S., and in those cases we haven't found where there's a common ground what we are looking for in terms of developing a relationship hinges on finding partners that are adding a significant value and in helping partners that are helping us grow in white space to Dell."

While the company has no plans to take its direct business through the channel, "we did identify a set of accounts that we wanted to work with partners on we see that as an example of how we can leverage our company on the benefit of partners and create a Dell solution for a new customer," Davis said.