Behind the Week’s Headlines: Dell targets the channel, but will the channel target Dell?

It’s been a few weeks since Dell Computer’s announcement that it will begin selling unbranded Dell desktops to value added resellers who are in the white-box market and the last I checked hell hasn’t yet frozen over.

Although perhaps the fire and brimstone has cooled just a few hundred degrees

in direct corelation to Dell’s extremely cautious and decidedly low-key experiment with the channel. Unconfirmed reports peg Dell’s sales targets for this toe dip into the indirect waters at under US$400 million . After all, you don’t go from being channel enemy No. 1 to the defender of truth, justice and solution providers everywhere overnight. Still, it’s pretty difficult not to consider this front-page news for VARs; Dell is going indirect even if it is with a US$499 machine that offers a wafer thin three per cent profit margin and few enticements for white-box resellers.

The most significant factor about this move is that it is being made in a reselling climate that finds a significant number of value added resellers who work with small business clients in the right mood to have a cup of coffee with manufacturers that represent some options. It doesn’t take much reading between the lines to make out that HP-Compaq and its perceived transition pains has set a large part of this stage for Dell. Although some resellers and distributors are tut-tutting over the merger and the fact the new company is taking some time to do some inward looking before it can properly service its channel partners, others in the channel that remain loyal to HP-Compaq are being patient and optimistic that the amalgation will indeed produce a new, improved channel-friendly vendor.

As reported in the pages of Computer Dealer News, and on www.itbusiness.ca, the strategy was concocted and implemented by the U.S. unit of Dell’s small business division and it is only being undertaken in the U.S. at present.

But if it works well there, is there any doubt that white-box markets around the world will become potential targets for Dell’s new – albeit muted – enthusiasm for indirect selling?

In another `we haven’t gone indirect before but what the heck’ story,

Xiotech Corp. which until now has been completely devoted to the direct channel in Canada has changed its tune and enlisted Bell Microproducts

Canada to handle its Magnitude, storage area network platform. Xiotech’s head of marketing reasoned that the SAN hardware and software developer needed to leverage the channel for success. “”The organization does not have feet on the street nor do we have the desire to put them there,”” said Dan McCormick. While this makes for a great “”feel good story for the channel””, to quote Bell Micro’s Michael Mercer, it makes me wonder what McCormick thinks it’s like north of the 49th. Hey, we don’t bite. And besides, Xiotech is based in a suburb just outside Minneapolis, in Eden Prarie, Minnesota. Heck, Minnesota’s practically the 11th province.

James Buchok is a former editor of Computer Dealer News. jbuchok@mts.net

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