Brenkel blasts Dell strategy

Jos Brenkel (pictured), channels boss for HP in EMEA, has accused rival Dell of operating a short-term opportunistic channel model in the Middle East. Not true according to Michael Collins at Dell, reiterating the vendor’s commitment to an indirect sales model in the region.

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By  Stuart Wilson Published  June 2, 2004

Jos Brenkel, channels boss for HP in EMEA, has launched a scathing broadside against Dell, accusing its fierce rival of operating a short-term opportunistic channel model in the Middle East. Not true according to Michael Collins, general manager at Dell Middle East, reiterating the vendor’s commitment to an indirect sales model. With rival Dell currently operating a selective distribution and channel partner programme across the Middle East, Jos Brenkel, VP and general manager solutions partner organisation (SPO) at HP EMEA, has issued a stark warning to the channel: “Dell’s Middle East channel is opportunistic and it is a customer acquisition strategy as opposed to a channel strategy. Partners that buy product from Dell are being treated badly. Dell goes in, uses the channel, takes the customer base and eventually walks off.” Brenkel claims that Dell’s strategy is aimed at making contact with customers and eventually disintermediating the channel’s role: “Resellers in the Middle East should look at a little history and stop being so opportunistic. How did Dell start in Spain? How did Dell start in Italy? How did Dell start in France? How much business does Dell do through the channel in these countries now? It is a customer capture strategy and the channel really should look at the long-term picture, not just the short-term financial benefits.” Michael Collins, Middle East general manager at Dell, has quashed these fears and reiterated Dell’s regional commitment to the channel: “There are no medium or short-term plans to go direct in the Middle East. The value that our partners bring would be very costly to replicate. We spend hardly any time thinking about the development of a direct model for the region in the future. Instead we focus on helping the channel develop and managing the relationships. Dell is focused on becoming an even better indirect vendor in the Middle East and has recruited staff to help this process.” With just 19 partners at present in the Middle East, Dell’s policy is to create focused interdependent relationships with its channel. “The partner segmentation and emphasis on training gives Dell’s channel the best return on investment,” explains Collins. “Partners get a huge amount of benefits from being part of Dell’s limited Middle East channel. Dell loses some of the benefits of an open distribution model, such as customers having a choice of partner to work with and a massive number of solution providers pushing the product, but what we do get is an incredible level of commitment from the partners that we have.” “When we meet with partners, we ask them what proportion of their business Dell represents and it is typically greater than 50%,” adds Collins. “Dell partners in the Middle East are in a healthy position and their satisfaction levels are very high. There is a high level of trust in the relationship and this is backed up by very little partner churn and no real channel overlap. The limited number of partners also means we do not have to spend time resolving channel conflicts.” The cost of running an IT channel lies at the very heart of this debate. Expansive channels create market reach but cost much more to run. Dell uses a select number of partners to keep costs low and keeps channel inventory to a minimum by using a just-in-time delivery system for customers backed up by slick logistics. HP harbours ambitious plans to reduce the number of logistics service providers (LSPs) it works with in the Middle East and Africa (MEA) to reduce the overall cost of operating its channel. “There are probably a couple of hundred logistics partner being supplied across MEA, and over the next 18 months I would like to drive that down to just four,” concludes Brenkel. “Will I have six? Maybe. Will I have 10? Possibly. Will I have 20? No.”

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