Dell Shuts Down White-Box Channel Effort

Dell has pulled the plug on a program to sell unbranded desktop PCs through channel partners. The company said customers prefer to buy the Dell brand.

But channel sources interviewed by The Channel Insider said Dell Inc. had trouble signing up VARs for the program, which kicked off in August 2002, because they dont trust Dell.

The Round Rock, Texas, vendors highly aggressive direct-sales business model has raised hackles in the VAR community, which has had to compete with Dells highly successful, price-competitive approach.

“Dell and resellers have a fairly adversarial relationship,” said Darren McBride, president of Sierra Computers Ltd., based in Reno, Nev.

Dell, however, is positioning its departure from the unbranded-systems market as a product end-of-life issue. Dell was selling the unbranded desktop PCs, or white boxes, to resellers through its Solution Provider Direct program, but found that the solution providers would rather sell Dell-branded products, company spokesperson Roe Thiessen said.

“This shows that we can explore different channels and meet customer demand. Our brand still works and still resonates well,” Thiessen said.

She declined to specify how many solution providers the vendor had signed up to sell unbranded systems.

Bill Hook, president of Keystone Computer LLC, based in Dubois, Pa., said he always viewed Dells unbranded system initiative as a ploy to take market share away from small systems builders such as himself.

But, he said, what Dell may not have counted on is that small, locally based systems builders have nurtured long relationships with customers who trust their recommendations and enjoy face-to-face contact.

“People that I talk to generally dont buy the Dell after they talk to me,” Hook said.

Bob Parsons, president of Automated Office Solutions, based in Evansville, Ind., also stressed the importance of relationships and face-to-face contact.

“Its a lot easier to drag me into your office because the system didnt work than it is to find a mail-order guy,” Parsons said. “Ive been in the business for 20 years. I have earned the trust from my customers.”

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Thiessen, however, said Dell has plenty of face-to-face contact with customers who want it. “We have a tremendous amount of contact with SMB [small and midsized business] customers. Were the No. 1 provider of information technology to this market,” she said.

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