Dell’s Channel Program No Longer Hiding in Plain Sight
Dell, the company that managed to reap about $4 billion in channel sales in 2006 without a formal partner program, is developing relationships with VARs and other solution providers to reach the thousands of SMBs around the nation. “They’ve had a somewhat strained relationship with VARs in the past,” says Richard Shim, a research manager at IDC, noting the financial success of Dell’s “secret” channel. “Dell is very successful in large enterprises and commercial [sites], but SMBs have been a tough nut for the company to crack. The VARs understand SMBs. They’re in the trenches.”
Until earlier this year, the Round Rock, Texas-based vendor worked with VARs and solution providers on a case-by-case basis. But in August, the company took a giant step toward embracing resellers when it named Greg Davis, previously president of Dell Canada, to the position of vice president of commercial channels, a move existing Dell resellers hope will provide them with increased resources, visibility, and legitimacy.
DOWN THE ROCKY ROAD
Five years ago, when Woodland Hills, Calif.- based Bagdan Consulting Inc. began selling Dell products, the PC maker required that VARs commit to buying at least $100,000 worth of its equipment, says Steven Bagdan, president of the IT consultancy. The 20- year-old firm had just won a large contract for multiple servers and desktops, so it had no problem fulfilling the requirement. Since then, Bagdan’s firm has seen its revenue more than double—sometimes increasing fivefold—each year. Despite Dell’s comparatively channel-unfriendly stance, Bagdan opted to resell Dell offerings due to the direct vendor’s highquality products, brand recognition, and use of standardized components such as hard drives, he says.
Likewise, SBBS Software & Consulting Inc. began selling Dell products to its residential and SMB customers about five years ago, based on the vendor’s competitive pricing and array of product options, according to Scott Gordon, president of the Glenview, Ill., reseller. “SBBS has had both good and bad experiences with Dell over the past five years,” Gordon says. “The biggest problem we’ve faced is that when the [Dell] sales team changed, it has never been a smooth transition. It just happens overnight. The last two [Dell] sales teams SBBS has been assigned to have been fantastic, and I hope nothing changes for a while.”
Another challenge, say VARs, is Dell’s lack of marketing material and preapproved logos. But developing collateral is just part of the picture, says IDC’s Shim. The company must also establish relationships with companies it formerly shunned. “A lot of their success hinges on building these relationships with VARs, and they haven’t really talked much about it,” says Shim. “It depends a lot on the [program] details. Dell hasn’t been willing to give up much of the margin; at least they haven’t in the past, and they’re going to have to.”
“Direct business is fine for the consumer, but with larger companies that doesn’t work,” says Bagdan. “[Larger companies] need a VAR to support their business models, as well as their hardware and IT infrastructure. This will do nothing but benefit the channel.”
—Alison Diana
