Is There a Chink in Dells Armor?

By Elliot Markowitz  |  Posted 2005-11-04 Print this article Print

Opinion: Don't sound the death knell yet, but things aren't looking as bright for Dell as they have been in the past, which may indicate channel-focused vendors are getting a leg up.

The company that has been giving the resellers, VARs and every PC manufacturing company fits and starts for the last 20 years appears to have a chink in its armor after all. Dell has made a living out of being more of a box pusher and highly efficient distribution machine than a cutting-edge technology company. Its low-cost distribution and highly customizable customer service model has cost many hardware-focused resellers that never adopted a services strategy their businesses. For the past 20 years Dell has also beaten other PC vendors into submission. Compaq is no more, as well as a ton of others such as AST, ALR and Leading Edge. It has also caused HP and IBM to lose money hand over fist for years trying to compete. The edge Dell had is that it was more a distributor and a channel in and of itself and didnt carry around the expensive baggage and inefficiencies of a hardware vendor. But is the tide turning? Have HP and IBM (now Lenovo) finally figured out that the PC business is about adding processing power and reliability? Have they learned that VARs and resellers really dont care about the margins on PCs anymore because there are none and they have already migrated to a services approach that many times doesnt even have a hardware play?
If you look at the latest financial results, one may start thinking along these lines. While Dell has warned that its third-quarter results are expected to come in at the low end of previous forecasts because of a disappointing U.S. consumer and U.K business, Lenovo said its second quarter revenue jumped 404 percent and attributed most of that hefty growth to organic growth and its acquisition of IBMs PC business.
At the same time, HP has been "doubling down" and working hard to strengthen its relationships with its channel, and that move will pay off in terms of bundling PCs into higher-margin services sales. So has Dell finally hit the wall? Have PC prices come down as low as they can? Can there be no more efficiency gained through its manufacturing/distribution model? If I were a former reseller that was pinched by the Dell model, I wouldnt be jumping in the streets just yet. This is not the beginning of the end of Dell, and although there does seem to be a small chink in its shiny armor, a little spit and polish will wipe it off quickly. Read the full story on The Channel Insider: Is There A Chink In Dells Armor?
Elliot Markowitz Elliot Markowitz is Editorial Director of Ziff Davis Media eSeminars responsible for the editorial content of all eSeminars. Markowitz is a 14-year publishing veteran and was previously Editor-in-Chief of CRM Magazine and the website and related live events. Before CRM Magazine, he was Business Editor at TechTV, responsible for helping to manage the TV station's website as well as conducting live on-air interviews with key industry executives.

Markowitz also spent 11 years with CMP Media's award-winning weekly newspaper Computer Reseller News (CRN), where he held many key editorial positions including News Editor, Business Editor, and Senior Executive Editor. In 1999 he was named Editor of CRN, responsible for the entire editorial operation of the newspaper and in charge of coordinating its redesign and re-launch in June 2000. While at CRN, Markowitz initiated many key alliances including the Industry Hall of Fame event in Las Vegas and the annual CRN/Raymond James Conference. Early in his career Markowitz was a news reporter on Long Island for the Massapequa Post.

He holds a B.A. in journalism from Hofstra University and is a graduate of the Stanford Professional Publishing Course.

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