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Dell looks beyond direct model

Dell looks beyond direct model

Dell Inc. CEO Michael Dell has dropped his biggest hint yet that the PC vendor is looking at an indirect channel.

In a leaked internal memo to staff, Dell listed several key steps the company would need to take in order to retain a dominant position in the PC market. One of these was to pursue new opportunities outside of its direct sales strategy.

"The Direct Model has been a revolution, but is not a religion," Dell stated in the memo. "We will continue to improve our business model, and go beyond it, to give our customers what they need."

Dell's admission is the first time he has shown an interest in developing an indirect channel. The strategy would be in stark contrast to its direct model of selling computers via its Web site and hotline.

Michael Dell was reinstated to the CEO post in January following the departure of Kevin Rollins. Since then, speculation has risen that the company could consider third-party distribution as a way to lift its stagnant growth rates.

Talking to IDG's Australian Reseller News last month, Gartner research director for client platforms, Martin Gilliland, said Dell had spoken recently about plans for a "Dell 2.0." While this clearly included alliances with other vendors, he had not been willing to rule out a channel play.

As well as references to breaking away from its direct model, the leaked memo mentioned the need to strengthen the company's push into emerging markets. He also took the opportunity to criticize Dell's competitors for what he called the complexity and "needless costs" they had introduced in customer environments.

"These so-called 'service divisions' create a never ending cycle of activity with unclear return on investment," he stated. "We intend to break this cycle. We will build different kinds of services and offer key technologies that will help customers escape this complexity trap and unlock the true potential of technology."

(Brian Corrigan contributed to this report.)


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