Will Dell Look To Government Channel In 2006?

Following comments by Dell CEO Kevin Rollins about a "soft" public sector, Dell may want to rethink its direct-sales philosophy, says one analyst.

Last month, Rollins pointed to the government market as an explanation for Dell's less-than-stellar forecasted third-quarter revenue. That admission could lead to a change in how it approaches the market, says Alan Webber, senior editor of government at Forrester Reseach, who is meeting with Dell executives next month to discuss its public-sector business.

"I'm interested in seeing what Dell does in 2006. There is the philosophy that the company needs to differentiate business a little better; they already do integration work, and are getting into other contracting areas," he says. Dell built a PC center in Texas for the Air Force, for example.

Whether that expansion in service offerings will be followed by increased support of the channel is anyone's guess, Webber says. If Dell wants to return to the days of substantial growth in a market that demands specialized skill sets, however, it may have no choice--relying on the revenue that comes from PC sales won't cut it anymore.

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"Dell has a transition they just have to go through," Webber says. "And it has to rethink how it looks at this channel, maybe not so much for the private sector market, but definitely for government."