An aggressive marketing campaign launched by Dell Computer into the secondary education market is causing unease among resellers that specialise in the education vertical.
Resellers such as Bathurst-based Colemans Office Products, which supplies local schools with HP and Apple desktops and services, is bearing the brunt of Dell's new focus on supplying desktops to secondary schools. Managing director Stephen McDonogh said Colemans has recently experienced a decline in sales, which he attributes to Dell's cutthroat prices on desktops sold to schools.
"We've noticed Dell has been winning more and more supply contracts to schools and this has directly impacted us. They've also been winning supply deals for printers and other peripherals by promoting special offers," he said.
Ian Higson, education account manager for reseller Metropolitan Business Machines (MBM), has also noticed Dell's increasing success in securing desktop supply contracts with schools, but said this had not negatively affected the reseller's sales.
Yet while Dell may have increased its desktop sales to secondary schools, this does not reflect an increase in Dell's market share across the entire education sector, according to research by analyst IDC. According to IDC's Darian Bird, the top four desktop vendors in the education space - Apple, Acer, HP and Dell - share a fairly even slice of the pie in terms of market share and this had not altered substantially in the last six months.
Dell's corporate communications manager, Rob Small, said the vendor has recently increased its focus on selling to secondary schools, particularly in NSW, rather than to its traditional target, tertiary institutions.
"We've been ramping up our business in secondary schools and have been carrying out an extensive catalogue marketing campaign," he said.
Small claims that Dell has increased its market share in the education sector and has managed to creep in on Apple's customer base. "We've noticed a trend whereby secondary schools are changing their technology and are adopting technology that is in prevalent use in the business world as a whole, rather than technology that is used by a few niche industries."
Resellers expressed mixed views on the long-term impact that a direct-selling model will have on a sector that is fundamentally governed by price.
"A lot of IT purchasers in schools are more interested in volume rather than specs and SLAs," Higson said. "They often don't add the cost of ongoing support services to the price of the hardware."
Higson believes that traditionally Dell "goes in low and hard" to establish a foothold in a particular business. After securing a number of long-term contracts, it gradually builds up its prices so its margins average out over time. "But in the education sector, Dell has to go in really low on every sale and doesn't have the opportunity to win back margin over time since schools rarely commit to long-term hardware supply contracts," he said.
Matt Dalton, business development manager of enterprise desktops at HP, said that multi-tiered vendors still dominate the sector and will continue to do so.
"Dell's greatest strength is their greatest weakness," Dalton said. He reasoned that while there will always be customers who base their purchasing decision on the price of hardware, the majority of customers have service requirements that Dell simply cannot meet.