Is Dell gearing to foray into channel in India?

Zia Askari

While Dell Inc, the globally recognized IT vendor, chooses to keep mum about
its secret rendezvous with the Indian channel community — various resellers in
the Indian region are elevated by this move and opine that both Dell and the
partners are set to make major gains because of this new initiative.

“I strongly feel that Dell is one of the best IT companies and it would
really be good to see them in action closely with the channel community in this
region. The channel as well as the end customer will gain a lot from this as
Dell products will be made available at ease and hence there would be more
choice in front of the customer,” explained Satpal Singh of Chandigarh-based
Dataspec.

Resellers across the country strongly feel that its not only world class
products that will be offered but also that the pricing of these products that
would be an attractive proposition for the end customer.

When DQ Channels contacted Dell for their comments, the company chose not to
comment on the latest happening till the time of going to press.

“I have heard that Dell is making its own secret channel, however we do not
know much about this initiative. It sure makes sense for them to go indirect
within India, as it would give them a big platform to sell their products and
increase their market share here. More importantly, India is a market where
relationships matter the most. Whether it is global companies like Intel, HP or
our own HCL or Zenith — all these companies thrive on channel activities and
building strong relationships. It would be very interesting to see how things
shape with Dell going towards indirect channel way,” said an IT reseller from
Kanpur.

Close encounters of VAR kind

Dell is said to have targeted the Value Added Reseller (VAR) community when
executing big IT orders. The company is already engaged in a camp-aign to
partner itself with certain key active systems integrators in the region.

Confirming this move by the company, a New Delhi-based solution provider said
that Dell approached his company inquiring about their IT orders, and looking to
establish partnership with the company.

Elaborating further a high-ranking official from the company said, “Sometime
back we got a call from Dell. They asked us whether we have any big IT orders in
place. I think the idea was to partner with certain select system integrators or
solution providers who can add value to Dell.”

As Dell is known to maintain intelligent supply chains, the end customer gets
to gain in the form of better pricing for getting globally recognized IT
products. The same formula gets translated in a better way when it comes to
executing big IT implementation orders.

The company is known to have partnered with certain key systems integrators or
solution providers, by entering into a 'transaction based MoU', in order to
execute these orders not only in India but globally.

According to Piyush Pushkal, Senior Market Analyst — PC Research, IDC
India, Dell is targeting the Indian market pretty aggressively. “As far as
Dell India is concerned, they are looking aggressive in targeting the Indian
market. While targeting this market, the challenge for Dell would be to select
the right partners. Dell is also working towards starting its manufacturing in
India. As of now Indian market is being fed by its Penang manufacturing
facility, once Indian manufacturing happens it will further reduce the lead
delivery time adding to its competitive advantage,” he added.

When it comes to Dell, the decision to work closely with resellers isn't
necessarily a new one. Earlier, the company has worked in areas like a white-box
PC program. “Dell has been one of the biggest success stories and it is its
ability to adapt according to the market dynamics that has kept Dell almost on
the top so far. So if the Indian market demands channel focus than I am sure
that Dell should be moving forward towards this,” informs another market
analyst on the condition of anonymity.

The VAR community with which Dell has formal agreements are those who sell in
the SME segment. These are typically system integrators, small consul­tancies
and ISVs that focus more on service than hardware. They tend not to buy in huge
volume, so they are used to smaller margins. Therefore, they are less likely to
be missing out on deals with other vendors.

Interestingly, the channel sales may be more appealing than ever for the PC
seller, which saw an uncharacteristic slip in unit shipment growth in the first
quarter of 2006. Industry expert now indicate that the company is using channel
primarily when it comes to dealing with the business rather than the consumer
segment especially when it comes to addressing geographies like India. Moving
forward, Dell will have to review its direct-sales approach as there is no doubt
that its preferred direct model is 'coming under pressure' today.