Dell's Delicate Channel Balancing Act
Sounds like Dell Computer is about to engage in a delicate balancing act with its new-found channel partners. The vendor is launching a managed services initiative to sell to customers directly. So will Dell destroy margins in managed services the way it did with PCs?
Just last year Dell launched a channel program to expand its revenue base and compete more effectively with rivals such as Hewlett-Packard. But will it now compete with those reseller partner in managed services, a hot field for the channel? Ziff's Channel Insider site has an interesting report on this subject, including comment from VARs concerned that the move will push prices down and erose profits.
Dell contends there is nothing to worry about, but any time a vendor engages in action that could ignite channel conflict, there's plenty of reason for concern. The conflict beween direct (vendor) and indirect (channel) sales ebbs and flows, depending upon evolving business models and general economc conditions. Right now there is a lot of concern about the economy. Meanwhile, the rise of managed services and SaaS are pushing channel partners to explore new ways of doing business and pressuring them to readust their margins. Dell's move very well could inflame an already volatile situation with the channel, so the vendor should tread cautiously.