CRN opinion: Dell needs to shelve direct approach

Once the relentless dominator of the global PC industry, Dell is undergoing a strangely downcast period.

Dell has recently endured an almost endless list of plight. These include issuing profit warnings, the threat of being de-listed by the NASDAQ stock exchange, launching one of the largest recalls in IT history after seeking to replace 4.1 million laptop batteries, being overtaken by HP for the number one position in worldwide PC market share, and most recently the departure of its chief executive Kevin Rollins.

These developments have seen many doubt the direct vendor’s future and has seen the channel gloat in a very ’I told you so‘ fashion. However, the channel which currently revels in Dell’s downward spiral could be the vendor’s saving grace.

Many vendors operate direct at first to establish a brand and presence before gradually shifting more of its business through the channel. Admittedly, Dell has taken this yardstick to the extreme with its direct model success, but that’s not to say opening up new channels would be a bad idea now. In fact, if Dell were to launch a retail or reseller channel it would make mainstream news around the world. It would be using an internationally strong brand and turning the previously damaging publicity on its head.

Dell has already launched a series of direct stores, or 'multimedia kiosks', manned by Dell staff. Consumers still have to buy direct from Dell online, but this is an obvious indication that Dell is entertaining the option of new channels to market. If these stores are a success, Dell would unquestionably turn them into fully-fledged retail outlets.

I think this is a more than likely outcome, but what about the traditional IT channel? I feel there is also a place for resellers and integrators within Dell’s set-up. I don’t think it needs a glut of niche and small SME resellers, but a base of large scale integrators in key geographies is a must if Dell is to wrestle back its number one crown from its more channel-friendly rival, HP.

Michael Dell’s pride in the prior success of the direct model should not cloud his judgement when considering potential new channels. Anyone who is gluten for punishment can read ’Direct from Dell: Strategies that Revolutionised an Industry‘, which was smugly penned by Mr. Dell himself. In light of recent events expect this to be hitting a bargain bin near you soon.

The problem Dell may encounter is the opposite of what it has been trying to establish. Its tagline of “you won’t find Dell in the shops” could come back to haunt the vendor. Resellers may not trust Dell’s initial foray into channel waters, but if Dell can find the right balance between what it is doing right direct and plugging holes using the channel, without creating a conflict interests, then the future of a modern day PC revolutionary could be in safe hands.

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