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Dell's direct threat intensifies

Dell's direct threat intensifies

The Dell direct threat cranked up another notch last week when it announced a $US16 billion OEM deal with IBM which observers believe sets the groundwork for Dell to become a total technology provider. While resellers contacted by ARN recognised the threat, they questioned the ability of Dell to scale up its direct model.

Dell also announced Gigabuys.com, a new online store which will sell not only Dell hardware but 30,000 computer-related products and services from many different brands as well, according to the company. The site will go international by the end of the year.

The Dell OEM deal with IBM will allow the direct vendor to include IBM technology in its computer systems sold to corporate customers.

This technology includes copper-based chip technology, screens and hard drive and storage products.

US sources indicate the deal will also allow for the future collaboration on products and technologies.

Once again fearing for their future, Australian resellers have reacted strongly to the situation, despite their determination to survive by offering personalised and localised services to the end user.

"I am not angry, but I am very cynical about manufacturers pretending not to sell direct, as this is just a way for IBM to sell direct," John Dembecki, managing director of Sydney-based Quindem, said.

Like most resellers ARN spoke to last week, Dembecki conceded that resellers "don't make much money out of selling hardware anyhow" and, since the contract does not involve services, the channel should not suffer a great deal.

Also relatively optimistic was ITF's John O'Meara, who contends that "it is actually the vendors who go direct that will have trouble. How are they going to handle 800,000 customers if they couldn't handle 6000 resellers and distributors?"

Questions like these have allowed speculation about the future of the two vendors to run riot, with some analysts suggesting IBM will depart from the sales side of its business to concentrate purely on manufacturing technology. IT industry analysts also tout the deal as an excellent opportunity for Dell to move into the realm of a total technology provider.

However, some resellers question whether Dell can make this transition.

"If they sell direct over the Net it will affect our sales quite drastically," claims Brian Robertson, a sales consultant at Bathurst reseller Coleman's Office Products. "But it will affect the end user more," added Robertson, who is anticipating that consumers might initially trial the direct model but eventually return to the reseller, albeit in a different form.

"Resellers will have to move away from how they do things now and start offering support and training services," claims Robertson.


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