Dell finally turns to resellers

Dell finally turns to resellers

Dell Computer, which built its business around selling PCs direct to consumers in a low-overhead business model, is to recruit resellers for the first time in order to gain more access to the corporate market.

Dell will offer an unbranded PC to a number of dealers in the US shortly, concentrating on dealers who effectively act as computer departments for small companies. Dell also will offer dealers financing and dedicated Web site access to its products and services.

A spokeswoman for Dell Australia said the strategy is limited to the US, and there are no such plans to do the same here.

The WhiteBox 510D will have a base price of $US499, and will be sold exclusively to IT service providers that register with Dell, said Dell spokeswoman Amy King. The service providers will then resell the PC to their clients at whatever price they choose, she said. Specific criteria for entrance into the program has not been determined yet.

The PCs will be available in a variety of configurations. The base configuration, for $US499, comes with a 1.7GHz Celeron processor from Intel, 128MB of RAM, a 20GB hard drive, a CD-ROM drive, and Windows XP. It does not include a monitor.

The margins on this product are comparable to Dell's other desktop systems available through its Web site, King said. Michael Dell, the company's founder, chairman and CEO, has said he expects the program to account for no more than 1 per cent of Dell's revenue over the next four quarters.

The white-box market is extremely fragmented, King said. While some PCs sold by small IT service providers are self-built, 60 per cent purchase white-box PCs for their clients from other manufacturers. Dell can provide a higher-quality PC at an equivalent cost to these IT service providers, as compared to a PC purchased from a smaller manufacturer, she said.

Dell will offer a one-year warranty on parts and technical support to the IT service providers in its program.

White-box manufacturers generally assemble, sell and ship PCs without a well-known brand name, usually to small businesses, educational, or government customers served by the small IT service providers Dell is targeting. Most white-box manufacturers focus on a specific region, but together they form the largest block of PC shipment market share, as tracked by IDC. In fact, IDC had to revise its estimates of the worldwide PC market earlier this year because it had undercounted shipments from white-box manufacturers.

Dell's usual build-to-order sales model will stay the same for this program, King said. The company will not manufacture the WhiteBox D510 ahead of orders; service providers will have to order PCs from Dell and be responsible for selling their stock to avoid inventory costs.

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