Any speculation about Dell changing its channel tune as it changes CEOs might be answered best by the company itself.
In a release announcing the decision to replace CEO Kevin Rollins with former CEO and founder Michael Dell, the PC manufacturer boasted, “There is no better person in the world to run Dell at this time than the man who created the Direct Model,” and most Dell-watchers say to take the company at its word that “Direct Is Religion.”
“Michael has been the biggest defender of the direct model, and his strategies and philosophies have seemingly been in sync with Kevin Rollins’, so we are not sure how Michael’s vision, strategies, tactics, and ultimately, execution will be different,” said Brian G. Alexander and Bob Gruendyke, analysts at Raymond James & Associates, in a recent post on the announcement titled “Meet the New Boss, Same as the Old Boss.”
There seems to be little doubt among interested parties, especially financial analysts, that Dell’s recent financial woes are tied to its commitment to the direct model, especially in emerging markets and the SMB (small and midsize business) space, where VARs or retail are key product resources.
“Many believe the direct model is reaching saturation in some markets,” said a senior official at a major IT distributor who asked that his identity remain hidden for fear of upsetting his own customers. “I think HP is moving ahead in market share is clearly [a result of] the channel.”
“Our value in the channel is the influence we have in the SMB space with smaller businesses,” said Dwayne Mott, president of Orbex Computer Systems, in Guelph, Ontario. “It is more than the price of the computer we offer, and I think clients understand that a competitive offering with local support to keep things running is worth more than minimal saving on a computer purchase.”
Dell, and even Michael Dell, have cracked the window on speculation in recent months that they would consider a channel approach, with Michael telling analysts in September that the vendor would “experiment and reach out to other means to reach the market,” as part of the “Dell 2.0” strategy to reexamine all aspects of the business model. Several resellers report closer ties to Dell and the manufacturer even had a booth at Gartner’s IT ChannelVision event in October.
It would behoove Dell and the company to continue the trend, officially or unofficially. “It is a different market than what he originally had his success in and he will need to apply new strategies to recapture the market share,” Mott said.
But the feeling is that the New Boss, who is actually the Old Boss, just isn’t likely to be the guy.
“I am not sure it could be Michael Dell to do it, since he is such a ‘direct’ guy,” said Tiffani Bova, research director of IT channel sales at Gartner Group. “But in light of all the market gains which [Hewlett-Packard] has seen over the past 12 months, which, one would argue, had a lot to do with their refocus on the channel, maybe [Dell] will consider it. ‘Consider’ being the operative word.”