Study: Channel-Friendly Dell Could Hurt HP, Toshiba

Almost 60 percent of solution providers responding to a CMP Channel Group survey said vendors will have to offer better pricing on notebooks to prevent the channel from supporting Dell.

Almost one in four solution providers said their notebook vendor relationships will change now that the Round Rock, Texas-based PC maker is expanding its channel strategy.

The survey results come several weeks after Dell Chairman and CEO Michael Dell vowed to step up the company's sales through indirect channels, after acknowledging that the channel is one of the fastest-growing areas of business for the company in North America.

Survey respondents suggested that when it comes to notebooks, Dell rivals Hewlett-Packard and Toshiba, as well as white book makers, could feel the impact of Dell's new approach.

Asked, "Which notebook brand in your line card will you de-emphasize in order to increase your notebook business with Dell," 20 percent of those not currently offering Dell said HP systems, 20 percent said white box systems, and 18 percent said Toshiba. Of solution providers now selling Dell notebooks, 46 percent said they would de-emphasize HP and 36 percent would de-emphasize Toshiba systems, the survey found.

Some 50 percent of the survey respndents said price impacts a decision to sell Dell notebooks, while 31 percent said availability and delivery, 31 percent said ability to buy direct from the source, and 29 percent said the ease of doing business. Twenty-five percent pointed to product customization leading to a decision to sell Dell notebooks.

"I live or die through what my customers think of me," said Ed Coyne, owner of Angelo PC, a San Angelo, Texas-based solution provider and current Dell reseller. "If I'm pushing a product that's less than what I believe is a good product, that's going to affect my business." He said that Dell gets the edge with his business over HP, because HP provides greater amounts of unwanted, pre-installed software. Coyne said he is upbeat about Dell's plans to invest more in the channel, although he is still evaluating the company's recent decision to sell some lower-end systems through Wal-Mart and Sam's Club stores in North America.

Some solution providers, interviewed about the survey results, suggested Dell might have a harder time making headway. Pat Walsh, owner of The Computer Station, an Orlando, Fla.-based solution provider, said Toshiba, specifically, has been appearing to get stronger as a channel partner with recent investments in that part of the business. Still, Walsh said he was not interested in a Dell relationship.

"I could see it hurting HP much worse than Toshiba," Walsh said. "Toshiba is getting their stuff together. They've put field agents out there that they have never had before. They've put money into their program." Specifically, he said, Toshiba sales representatives have shown a much greater presence than in the past and have actively engaged his company.

"I'm a small business, so if they're willing to spend that time on me" Toshiba will be difficult for Dell to outmaneuver in the channel, Walsh said.

When asked what other vendors would have to do to keep solution providers from supporting Dell, 59 percent said "offer better pricing," while 38 percent said, "improve technical support."

Dell executives last month acknowledged that its channel sales already amount to about $4 billion annually. But the survey did show that Dell still has work to do with large segments of the channel in North America. Of those who said they wouldn't back an expanded Dell entry into the channel, almost half said they haven't supported Dell in the past, and 48 percent said there was "a lack of customer demand" for Dell.

Of those solution providers who offer Dell notebooks now, 55 percent say they actually lead with Dell as their primary brand offering. That could increase.

The CMP Channel survey in early June questioned some 150 solution providers on Dell's channel strategy.