Listen to this article
Dell, the struggling computer maker, on Wednesday outlined plans to reverse two decades of reliance on direct sales by broadening its business model to include third-party vendors and retailers.
The move to embrace computer re-sellers, the vendors who design and install computer systems for clients ranging from hedge funds to hospitals, represents a change in strategy for a company that built its business on direct sales of computers to customers over the telephone and through its website.
Dell had previously hinted that it was examining ways to broaden its retail presence, which so far consists of a single experimental store and more than 100 smaller kiosks.
“We’re going to take the indirect channel much more seriously,” Dell said. “We’re looking at solutions providers as customers and trying to grow the business.”
The comments followed an interview with Michael Dell, chief executive, published yesterday in CRN, a trade magazine focused on re-sellers.
“There are certainly folks out there who don’t want to buy direct,” Mr Dell said. “So now those customers will have a chance to have Dell product as well.” He said the company intended to build on its relationships with re-sellers and retail partners “not only here in the US, but around the world”.
While other computer makers – including IBM and Hewlett-Packard – have long relied on re-sellers and retailers for a substantial chunk of their annual sales, Dell has shunned such indirect relationships, arguing that direct contact with the customer is the best way to streamline costs and respond to changing demand.
Although the company has links with some third-party vendors, it said it had never before viewed the channel as a significant business. Mr Dell indicated that would change. “There is great interest here,” he told CRN. “We’re going to ramp it up quickly.”
Dell declined to comment on any other retail plans. It has traditionally avoided selling computers through retailers, because it allows the company to avoid carrying costly inventory.
Shares of Dell rose 3.3 per cent on Wednesday to $25.49. They had fallen from a high of $41.29 in August 2005, before the company’s stumbles began.
The rise came in spite of news that Andrew Cuomo, New York’s attorney general, had sued the computer maker, alleging that its sales practices had deceived customers. Dell said it intended to fight the suit.
Last year, a series of stumbles led Dell, which was founded by Mr Dell in his University of Texas dorm room more than 20 years ago, to lose its place at the top of the PC market to HP. This year, Mr Dell returned to the chief executive role, replacing Kevin Rollins, in an effort to put the company back on track.
Get alerts on Technology sector when a new story is published