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Dell To Diverge From Direct Sales With Major Channel, Retail Push

Dell is set to turn the page on 23 years of history by launching a major effort to engage commercial resellers and retail channels, says CEO and founder Michael Dell in an exclusive interview with CRN.

The strategy shift, revealed by Dell in an exclusive interview with CRN, will mean that the computer hardware giant will begin providing many programs and strategies that VARs have said they need to go to market with the Round Rock, Texas, company's products.

Dell said sales via solution providers have quietly become among the company's fastest-growing and most promising. And for the first time, Dell executives gave a figure for the company's annual sales through the North American solution provider channel: $4 billion and growing.

Click here for an exclusive Q&A with Michael Dell.

"You should try to recognize that it's already a several billion-dollar business. Clearly, there are a lot of happy partners there," Dell said in the interview. "We could do some more things like creating a more definitive program, an authorized logo, that kind of thing. We could do things like deal registration, which we've already started to do in our federal program. So we're going to work on a number of different program elements and reach out to these partners because, actually, this part of our business has been growing faster than the overall category. We take that as a positive affirmation that there is a great interest here. We're going to ramp it up quickly."

Dell also said his company plans a major, global effort in the consumer retail space that will garner significant attention.

"I think you'll see Dell showing up in a lot more retail locations -- not only here in the U.S. but also in major countries around the world over the next several quarters. So stay tuned," he said.

Some Dell channel partners say they have already begun to see a difference in the PC maker, which historically has been viewed as a competitor of the channel because of its direct-only sales heritage.

"They are certainly treating us well," said Lynn Runnals, vice president of Multimax, a Herndon, Va.-based solution provider that sells to several large government accounts.

Runnals, whose company has partnered with Dell for several years, said there has been a noticeable warming of late. "Our relationship with them has, at times, been adversarial," he said. "It is not now."

Dell's new channel focus comes with the company at a crossroads. For the past several quarters, it has seen sluggish revenue and earnings, and its market share has declined while that of rivals, notably Hewlett-Packard, has grown. Last year, HP surpassed Dell as the world's No. 1 PC maker, though Dell in the interview noted more than once that his company remains the top PC brand in the United States. And in addition to retaking the CEO post earlier this year, Dell has replaced virtually the entire senior management of his company.

Although Dell has worked with solution providers for several years in some U.S. engagements, the company has generally avoided providing many of the financial incentives to partners that its rivals have provided. That quietly began to change earlier this year, at about the same time Dell took the CEO reins back from Kevin Rollins.

"From Dell's standpoint, there are some customers who want to work with a solution provider," said Arly Guenther, CEO of Arlington Computer Products, a Buffalo Grove, Ill.-based solution provider and a member of Dell's Solution Provider Direct program. "From our standpoint, there are some customers who want a solution with Dell products."

Of Dell's new channel effort, Guenther said, "I think what this really has to do with is solving customer needs."

For Dell, the realization that solution providers could help his company grow came from watching its channel sales climb, as well as recognizing the value-add that channel partners have brought to Dell hardware in delivering complete solutions.

"The great thing about the channel, especially those channel partners that have succeeded, is that they keep evolving and keep changing and adding new capabilities and services. Certainly, we've seen all sorts of changes in the last 23 years, as long as I've been in this business," said Dell, who founded the company in 1984.

"The smart, successful channel companies have continued to move their value-add into more interesting and developing areas. That's a continual process. It's going to keep happening forever. I think that's what the future is ... defining those things that are really relevant for customers and going to those areas," he said. "What we're finding as we go further and further with partners is that there are large ranges of unique solutions that these partners can provide to customers that would be way outside the range of things we would traditionally do as a company."

And, Dell noted, "We will not be bound by the past."

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