Dell now a bigger threat to the channel

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Dell's threat to Australia's traditional hardware channel is likely to expand, according Steve Rust, MD at broad-based IT distributor Ingram Micro.

Speaking at the IDC Directions seminar in Sydney, Rust said that the Dell strategy was to get Dell-branded products into as many customers' businesses as possible. In that sense, it was acting as a distributor – but one with a very particular focus. “For many vendors, Dell is a channel. Based on its behaviour, Dell is trying to make as much of the product sold into its customer base Dell product,” he said. “Over the last couple of years, Dell [has expanded into] networking, printers, PDAs ... soon it will be cameras, mice and all sorts of things.”

Rust said he predicted Dell would experiment and seep into “every possible area where customers are buying hardware”. He pointed out that Dell only partners with the existing Australian channel in some large outsourcing or services deals.

“Having said that, there's no industry I know where one business model meets all the needs of the customers,” he said.

Australia's fragmented and complex channel was likely to continue to serve customers better than one that relied extensively on vendors dealing direct.

One way that existing channel players could maximise their indispensability to vendors was in educating end-users about the range of hardware available. Most Australian businesses fall into the SMB space, and unlike very small or very large companies, often did not have the resources to research IT product.

“The channel can take a particular solution to the business and introduce that to the customer. Often SMBs do not know the solution, do not even know what they need,” Rust said. “There's a lot of different behaviours going on in the industry.”

He said the channel proved its worth by building strong, complex relationships with its customers. “I see it as like the dating game, it's exactly the same in business. You have slutty relationships where both customer and supplier are there for the transaction and there's not much follow-on,” he said.

The channel needed to build customer partnerships that were “more like a marriage” – based on complexity and offering products and services that were integrated into a whole-of-business approach. Such relationships were much harder to get out of, even if they ended up in court, Rust said.

“For example, PABXs – it's simply not easy to chuck out a Nortel or Lucent or Ericsson solution and put in another one,” he said. “[But] ultimately, each party can walk away or break the relationship.”

Dell-branded printers are expected to hit Australia later this year, and Dell has also recently announced a partnership to develop handheld devices incorporating wireless data access.


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