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Dell Stays Serious About the Channel

A little over a year after publicly pledging a major channel push, the standard bearer for direct sales, Dell, is continuing to invest in its partner program and increasing its number of partners and its channel-related revenues.

Chairman and CEO Michael Dell first said publicly that his company was committing to the channel in May 2007. The company followed that with the formal launch of its new PartnerDirect program in North America in December.

In the first few months of this year, the company expanded PartnerDirect to its Asia Pacific/Japan region.

"Since we launched the program in the United States in the fourth quarter, we've added over 3,500 new global partners," said Michael Dell during an earnings call Thursday night. "And our channel business is now on a $12 billion run rate."

There was little mention of the channel revenues in Dell's investor releases, which focused on topics of more interest to shareholders -- the overall plan to restore the company to strong profitability and market share leadership.

For its first quarter, Dell improved revenues 9 percent over the year-ago quarter and had a 12 percent increase in earnings.

For context on Michael Dell's new numbers, the 3,500 new channel partners join about 30,000 Dell channel partners worldwide. In late 2007, Dell also said that channel revenues already accounted for about $9 billion of Dell's approximately $60 billion in annual revenue. If the new run rate of $12 billion is maintained, Dell is on track for at least 33 percent growth in channel revenues.

The second half of May was a busy time for Dell PartnerDirect. The company hosted a newly formed Partner Advisory Council at its Round Rock, Texas headquarters. Dell executive participation included Michael Dell himself, who told the group, "This is not an experiment. What we want to do over the next three to nine months is better understand the capabilities of our partners."

Dell also launched a Dell Channel blog on May 22.

Among the entries is a Q&A with Greg Davis, vice president and general manager of Dell's Americas Channel Group, who said partner deal registrations total $200 million so far. Davis also promised to expand PartnerDirect to Mexico in a few months.

So what do you think? Is Dell doing the right things here by the channel? And does what they're doing match up to all the attention the program is getting? Let me know at sbekker@rcpmag.com.

Posted by Scott Bekker on June 02, 2008 at 11:58 AM