Dell should abandon direct sales model


Catching up with HP and Acer requires entry into retail, analyst recommends.

Michael Dell's return as the chief executive of Dell could mark the entry of the computer maker into the retail market, analyst firm Current Analysis suggested.

"We believe that at Dell, there is a high-level belief that in the consumer market, customers need to experience (i.e. touch and feel) the products more than in the business segment. Retail is the next logical step," wrote Sam Bhavnani, a research director, covering computing and storage for Currently Analysis in a report.

A retail presence won't just allow consumers to gain hands on experience with Dell computers and flat panel TVs. It can also help polish up the company's tarnished customer service image by serving as a drop off location for products that need servicing, he suggested.

Bhavnani cautioned however that shareholders could undermine a move into retail because of the costs and because the investments could take several years to show a pay-off.

Michael Dell last week was appointed as the company's chief executive, a position that he had given up in July 2004. The move came as the computer maker is facing declining revenues and a drop in its overall market share.

Dell currently operates so-called Dell Direct Stores where consumers can test drive select computer models and talk with company representatives. The kiosks however don't sell any merchandize and still require buyers to place their orders through the company's website.

Under the previous chief executive Kevin Rollins, Dell focused largely improving its supply chain, allowing research and development to fall by the wayside. The computer maker fell behind in the industrial design and customer experience of its computers.

Consumers in recent years have placed an added emphasis on those areas, as is witnessed by the rise of Apple and HP. "Dell seemed to lack the intangibles that work in a Web 2.0 world," noted Bhavnani.

He expects that Michael Dell will put more emphasis on product innovation.

Copyright ©

Dell should abandon direct sales model
Top Stories
Meet FABACUS, Westpac's first computer
GE225 operators celebrate gold anniversary.
NSW Govt gets ready to throw out the floppy disks
[Opinion] Dominic Perrottet says its time for government to catch up.
iiNet facing new copyright battle with Hollywood
Fighting to protect customer details.
Sign up to receive iTnews email bulletins
Latest Comments
In which area is your IT shop hiring the most staff?

   |   View results
IT security and risk
Sourcing and strategy
IT infrastructure (servers, storage, networking)
End user computing (desktops, mobiles, apps)
Software development

Would your InfoSec team be prepared to share threat data with the Australian Government?

   |   View results