It's Official: Dell Unveils Details of Long-Awaited Channel Program

Dell officially opened its latest chapter Wednesday with the launch of the long-awaited Dell channel program, offering registered partnerships to resellers it once fought tooth and nail against with a promise that the company is prepared to restrict its direct sales force to keep it from stealing channel business.

With the launch of the Dell channel program, the company flipped the switch to turn on a dedicated web site for solution providers that will manage conflicts as resellers register deals, access its product lineup and manage logistics with Dell, company executives said. The Web site was designed with Salesforce.com, and encrypts solution provider data to prevent Dell's massive direct sales force from using it to win business away from resellers.

"Our vision is that any service we provide at Dell, we can provide it through our channel partners," said Greg Davis, vice president and general manager of Dell's Americas channel organization. "These are truly, I think, innovative steps for Dell."

The launch comes several months after company executives began saying publicly that the company would heighten its involvement with the channel, and amid increasing pressure on the company by value-added resellers to spell out the specific terms and conditions of its program.

Specifically, Dell said it will:

* Launch a formal deal registration program that allows registered and certified partners to submit potential client sales -- of at least $75,000 -- to Dell's channel executives, who will then grant the reseller exclusive status on the deal or show that it had already had a steady business relationship with that client.

* Work to double its current lineup of 15,000 resellers within three years.

* Immediately move 1,000 accounts that Dell's direct sales representatives had been working on to Dell's channel sales organization, so resellers could begin calling on those accounts.

* Provide logos to both registered channel partners and, separately, to certified channel partners that have met requirements to specialize in one of several core focus areas, starting first with a managed services specialty.

* Have its channel sales outgrow its direct sales out of the gate, continuing or building off its current pace.

* Provide enhanced support for solution providers upon the program's launch, with an eye toward providing dedicated support and increased numbers of field sales representatives for resellers later on.

Next: Deal Registration Changes?

Davis said the company intends to lower the threshold for deal registration below the $75,000 minimum once the program is running and Dell's channel organization can scale out.

Dell slated for Wednesday a "virtual town hall" during which its channel executives will field questions from resellers.

Dell's channel program launch follows by six months Dell Chairman and CEO Michael Dell's pronouncement that, after 23 years, direct sales were not a religion at Dell and that the company would work to grow even faster its $9 billion in annual sales through the channel -- $4 billion in its Americas region -- that has already grown, traditionally, at 16 percent.

For the past six months, Dell executives chalk-boarded a channel program knowing that a sizable percentage of resellers would remain suspicious of its intentions -- even resellers that had previously sold Dell products to customers.

"The solution provider network that's out there -- they have this fear, uncertainty and doubt about the Dell direct model," said Darren Wesley, vice president of professional services with Arlington Computer Products, a Buffalo Grove, Ill.-based solution provider that has had a working relationship with the PC maker. "There have been a lot of solution providers who have engaged with Dell. And we've been successful for eight years. With this, we can certainly state we are satisfied with the development of their internal channel program."

Wesley said that his company, which also sells Hewlett-Packard, IBM, Lenovo and other vendors products to customers, is able to wrap a layer of service and support around Dell hardware as part of a total solution, and that the PC maker has not attempted to sell directly to any of Arlington Computer Products' customers even without a channel program. His company had not participated in a pilot program that included Dell's new reseller portal, a pilot that did include as many as 75 other solution providers from North America.

Davis acknowledged the portal and technology piece to managing channel conflict was only one measure that the Round Rock, Texas-based company would need to undertake to avoid failure with its channel effort.

In an interview, Davis described a process under which he and other Dell channel executives would take a personal role in overseeing conflict that arises between channel and direct sales representatives. In what he described as a major development, Davis said Dell sales representatives would be compensated the same on deals whether they are closed directly or through a solution provider -- removing financial incentives some Dell employees may have considered that could have spawned attempts to sell against resellers.

Upon the new program launch, Dell will begin certifying solution providers in what will eventually be about six different focus areas, beginning with managed services.

The company has named Dan Phillips as its global director of channel services, following Dell's acquisition of Phillips' company, Silverback Technologies, earlier this year. Phillips said that as many as 150 solution providers that had been certified on Silverback's platforms would automatically qualify for Dell Certified partner status once they register as a Dell partner.

"Here's an ability for partners to bring value to customers that Dell wouldn't otherwise reach," Phillips said in an interview. "It is just an obvious place [managed services] to come out with a partner program." Phillips said that, in the 120 days since Dell closed its acquisition of Silverback, the organization has been integrated into Dell at large and the company has added a "gigantic" staff to provide support to channel partners. He stopped short of saying how much support staff would be involved.

With his new title, Phillips said, his portfolio is expanding beyond Dell's Silverback portfolio into other service delivery areas with the channel.

Dell's channel launch comes during a whirlwind week for the PC company. Last week, the company announced quarterly earnings that, while showing growth, missed Wall Street estimates by a penny per share and its stock price was subsequently hammered by investors. On Tuesday, Dell announced it was initiating a $10 billion stock buyback -- the first buyback in about a year -- and conducted its annual shareholders meeting. Meanwhile, the company is still under investigation by the U.S. Securities and Exchange Commission and the U.S. Attorney for the Southern District of New York in connection with accounting and financial reporting irregularities that some Dell directors, after their own probe, said were the result of misconduct by several unnamed executives at the company. Some of those executives have since been pushed out, and current Dell executives say the accounting irregularities, while troubling, were comparatively minor.

In addition, Dell has been fighting to hold on to market share, after having been passed last year by Hewlett-Packard, Palo Alto, Calif., as the world's No. 1 PC maker and, last quarter, surpassed by Acer in world notebook market share according to research firm iSuppli.