From the trenches: The Dell factor

OPINION: Just about every retailer and street-level reseller I have ever spoken to at some point in time, has commented about the effect that Dell is having on their business. Most comments in the past have centred around Dell’s price aggressiveness in the hardware market.

Dell is everywhere -- on television, radio and in our weekend newspapers.

There aren’t many resellers and system builders in the market that can compete against this low-cost hardware model, painfully thin margins and its aggressive marketing and pricing strategies.

Our cover story this week looks at whether this same model would be applied to the direct seller’s growing worldwide services business. What we have found out, is that Dell’s services business is growing at a rapid rate here in Australia, albeit from a small base.

In fact, Dell’s local services sales manager Tony Windeyer revealed that the company expected services to grow at twice the rate of Dell’s overall business. The company services group is now offering software migration and storage network planning and management services on top of regular break/fix and helpdesk style services.

Let’s face it, if Dell get serious enough about grabbing slices of your bread and butter services business, you may have something to worry about. Also, if Dell can apply the same hardware cost model to services, that would have the potential to cut into your services margins.

Still, services is about people and people cost money and it may take a while before Dell services are everywhere, particularly given how long it has taken for the company to build its hardware business.

Whether or not Dell’s push into the services market works, there are things you could be doing as a reseller to make sure the giant doesn’t intrude too much on your patch. I’m stating the obvious, but if when it comes to services ‘local touch’ is important. It all depends on the rapport to you have with your customers and how far you’re prepared to go when it comes to service.

Not trying to compete with Dell on price -- in the hardware and services game -- will probably help your cause as well.

On the flipside, in the future, there may be some opportunities to partner with the company. After all, it’s working for some.

Are you coming up against Dell in the services market? Do you have anything to be concerned about or don’t you think they will succeed in this game?

Email me your thoughts. Or click here to go to the homepage to participate in our online poll.