If there were any doubt about Dell Inc. becoming a serious enterprise computing rival to Hewlett-Packard Co., it was erased by the intense $2 billion bidding war the two companies are waging for 3Par Inc. and its storage expertise. Regardless of which company prevails, the victor will be forced to pay far more than anticipated.
"I'm not surprised by this higher-end storage play," says Bruce Lichorowic, CEO of Bluehawk Networks Inc., a Dell partner advisory council member in Campbell, Calif. "It really strengthens our portfolio and brings us right down the alley to what we were looking for. It also allows us to compete with HP more head-to-head."
That HP would bid so ferociously for 3Par is, perhaps, a testament to Dell's rising credibility within the channel. Earlier this year, Greg Davis, Dell vice president and general manager for global commercial channels, said in an interview that the company's U.S. channel business was growing at about two times the industry average. Mind you, that's coming off a modest base since the company's formal PartnerDirect program was launched almost three years ago. But Davis also said Dell's U.S. partners were registering about 1,200 deals per week.
Close partners like Bluehawk Networks, which counts on its Dell practice for about one third of its revenue, said Dell's channel team is doing many of the right things when it comes to engaging in active dialogue with its channel and has made a surprising amount of progress to date.
Two main criticisms remain: first, that Dell's reward structure is still tied too closely to product volume in a world that is shifting toward the cloud and managed services, and second, that some members of Dell's direct sales team will take a sale direct if they believe it might not close in Dell's favor.
"If they don't think you're going to get the deal, you're going to be cut out," said Rory Sanchez, president and CEO of SLPowers, a solution provider in West Palm Beach, Fla. "There aren't clear cut rules of engagement. There appear to be, but sometimes there really aren't."
Sanchez believes, however, that certain partners don't have to worry about the direct threat because they have committed heavily to the vendor, and its channel team does a good job of advocating on their behalf.
Peter Kennedy, co-founder of Kraft & Kennedy Inc., an IT solution provider with a strong legal practice based in New York City, said Dell's channel team has expended lots of energy to make its program viable. Although there have been hiccups along the way, Kennedy said Dell's deal registration program works smoothly.
He suggested that Dell benefits from some of the recent management changes around HP, including the surprise ouster of CEO Mark Hurd. But that doesn't mean Kennedy doesn't want more out of Dell. He believes the company needs to turn up the heat when it comes to technology innovation and in recognizing value that isn't associated with high product volume.
"The vendors have to understand who moves their product and at some point they have to rationalize between box pushers and people who are solving problems for their customers," Kennedy said.
Georgia Vasilion, director of public sector business at Technology Integration Group (TIG), a San Diego solution provider that is one of Dell's largest U.S. federal and commercial channel partners, said that the company's advisory council has a loud voice in helping shape future strategy -- all the way to the boardroom. TIG was contacted proactively for feedback earlier this summer by Dell founder and CEO Michael Dell. After receiving TIG's suggestions, he responded personally, within a matter of hours, Vasilion said. "They have an interest in helping us against our mutual competitors," she said.
Indeed, partners says one of Dell's biggest strategic weapons right now is the overall impression that it is willing to listen, even if it doesn't have the most innovative programs in town. These partners say the same cannot be said right now of other large hardware vendors.
"Six months ago, I would have had a long list of things that [Dell] could be doing more of and better," said Stephen Brown, vice president of sales and business development for Bluehawk Networks. "But as we have been watching, many of these requests have been addressed. They have made great strides toward moving toward a more channel-friendly or channel-compatible company."