News that direct vendor Dell has for the first time turned to the channel in the US has been treated with scepticism by local players, who don't believe the vendor will be able to make the model work here in Australia.
Dell, long considered the biggest threat to the channel with its direct-to-consumer business model, announced last week it would offer an unbranded PC to dealers in the US, as well as financing options and dedicated Web access to its products and services. However, a spokesperson for the company in Australia was adamant the strategy was limited to the US, and there were no plans to launch the scheme locally.
Despite being the champion of the direct market, Dell has dipped its toe in the Australian channel from time to time. Last year, Dell's enterprise services division approached service providers about selling Dell servers.
The vendor also uses the channel to move cancelled orders. With no warehouse of its own, Dell turned to Computer Disposals to shift everything from notebooks and monitors to workstations.
When ARN initially contacted Computer Disposals, managing director Tom O'Donnell was unaware of the US announcement, but said he thought it was a positive move. "It would be great if Dell would support the channel in Australia, but I think it is unlikely," he said.
However, local PC companies believe Dell's US strategy will not work in the local market and would be a step backwards for the company. "Unless they have a price differential that is good enough to make a profit, I don't see how it can work here," said Joseph Lui, service manager with distributor and PC assembler Protac. "Vendors are trying to eliminate the middleman to be more competitive. If Dell is going to try to use the channel, they have absolutely no competitive edge.
"Dell's model is not flexible enough for the channel," Lui added.
O'Donnell said he felt the channel was vital to both the consumer and the industry. "The key advantage of being in the channel is allowing brands to have face-to-face customer contact," he said, adding that he has spotted market gaps in Dell's current model.
O'Donnell has recently been appointed managing director of Cornea Australia, the local arm of flat-panel monitor manufacturer Cornea Technology. Cornea's entry into the Australian market will focus purely on the channel with no direct dealings with customers, he said.nFor whom the Dell tollsThere is no doubt that Dell Computer Australia is first and foremost a direct seller, but there have been occasions when the vendor has flirted with the channel.
This online e-tailer currently sells obsolete Dell hardware from orders that are not fulfilled. It handles the disposal sale of cancelled corporate orders, supplying new warranted products that are outside the normal sales channel of the manufacturer. Computer Disposals is not the only e-tailer that has had a relationship with the direct-selling vendor. In October last year, Dell launched an online affiliates program in Australia. This allowed online businesses to earn a 1 per cent commission if hits from the partner's site resulted in the sale of a Dell machine.
Around 12 months ago, co-location hosting service providers were approached by Dell's enterprise services division to gauge interest in reselling Dell servers through such companies. ENet21 is a service provider that also resells and recommends server hardware to its clients, but a company spokesperson said the reselling initiative with Dell never really got off the ground. Now the company has an informal relationship with Dell to get better pricing for customers, but does not stock or sell Dell products.
MSC Software Australia
Dell also partners with software suppliers that sell into niche industries. MSC Software has had a long and successful history at selling CAE software applications that demand high performance from hardware. MSC is a value-added reseller of Dell Workstations, bundling the hardware with its specialist software for users in the engineering and scientific industries.