Private Dell: We will not suddenly try to cut out the middleman again

No return to worshipping the direct-sales cult, insist bigwigs


Dell has signalled to channel partners that its transition to private ownership will not mean a return to strategy that it was once famous for - cutting out the middlemen.

Shareholders yesterday took just twenty minutes to pass CEO and founder Michael Dell's proposal to remove the company from the NYSE in return for $24.9bn in cash.

And unsurprisingly, hours later Dell's global channel chief Greg Davis sent a note to partners to put to bed any fears they may have held about the next phase in the company's development.

He talked of "commitment" toward the mighty firm's omni sales model - direct to customers and through partners - as being unchanged.

"Quite simply, I believe our channel partners will benefit from, and see the value of, our accelerated strategy and business approach," said Davis in the note, seen by El Chan.

Dell will "maintain our deep relationships with channel partners", be on hand to "solve … customers' biggest pain points", and "remain easy to do business with".

As spelled out in a conference call with analysts last night, the company will continue expanding in the enterprise tech with investments in R&D and acquisitions, target emerging markets, expand the Partner Direct channel and invest in PCs.

The future success of Dell and its channel partners seems inextricably linked, something that once seemed unthinkable.

The last major shift by Dell, in Europe anyway, came five years ago as of last February: Michael Dell had returned to the helm and decided to formalise links with channel partners.

Prior to that, channel companies accounted for 15 per cent of Dell's global revenues but this was a point it was loath to admit.

The man Michael created Dell 2.0 by making official its partnership with the middlemen that he had once dissed as an unnecessary link in the supply chain. He said direct was no longer a religion at Dell.

Dell has now amassed more than 133,000 partners worldwide, with circa 4,000 certified as top-tier Preferred or Premier. It approves tens of thousands of deal registrations a quarter - the mechanism Dell uses reward firm that bring deals to the table - and this is all too much to risk.

The firm put in place numerous tools to minimise conflict between channel pals and the direct sales force - on top of the aforementioned deal reg - that involved neutralising internal compensation for its sales force so as to encourage them not to see channel firms as their enemy.

Things aren't perfect: instances of conflict emerge now and then, but channel partners generally convey to The Channel that they have the sense that Dell is not against them, it works through issues and escalates them if necessary.

Dell has woven training into its programmes, and offered 207,000 channel courses last year that housed 27,000 students.

Across all channels in EMEA, partners accounted for roughly 50 per cent of Dell's turnover last year, and represented the fastest growth area. It probably helped that companies Dell acquired already had a channel strategy.

Dell is so firmly in bed with the channel that if it were to pull out again - as it did almost overnight in 1996 - then the resulting catastrophe would have been far worse than the outlook CEO Dell painted if the firm had simply remained publicly quoted. ®

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