Dell Cheating on the Direct-Sales Model? 116
capt turnpike writes "Despite its CEO saying that the direct model is the company's 'religion', according to eWEEK.com, Dell seems to be moving away from direct sales and working with value-added resellers." From the article: "Still, 'they'll never admit it or make [the channel] a formal program,' said one analyst who asked not to be identified. 'If you look at Dell's stock versus HP's, part of the difference has to do with Dell's reputation for owning the customer. There's a sense they own the entire margin and have higher profits because they sell directly. It makes them appear more valuable to Wall Street.'"
We just bought a bunch of dell from Zones (Score:1, Insightful)
Re:We just bought a bunch of dell from Zones (Score:2)
Basically, Zones is a Direct customer of Dell. Zones "buys" a crapload (technical term) more servers than you do, earning a bigger discount. they can then resell them to you for a small markup and still make money. This can save you a few bucks, but in my experience always complicates thing to the point of silliness and can cost more in the long run.
Now, if you getting them as a true VAR (folks installing Exchange on them for you, etc), that could work out well
Silicon Valley Business Model is Dead (Score:2, Insightful)
Companies like HP, IBM and Microsoft survive because they offer dividends to their investors. People get real returns: real money back quarterly that they do what they want with. Silicon Valley investors, on the other hand, are playing musical chairs and the winners are the managers of the companies who can time their exits exquisitely and dump their stock on the hapless,
Re:Silicon Valley Business Model is Dead (Score:4, Interesting)
Re:Who's missing is AAPL and GOOG. (Score:2)
The buy and hold investor historically makes 15%, including down years, avraged accross all stocks. The Bank interest investor does not make 4% typically, rates have been as low as 1% or worse as recently as 2 years ago. Just because some hot shot internet startup bank is offering 4% to lure money into their venture doesn't make it a "bankable" number.
People who lost their shirts in the Dot Com crash were buy an
Re:Who's missing is AAPL and GOOG. (Score:2)
I call bullshit. You're saying that even on down years, the average stock goes up 15%? I don't think so. You might (and I mean *might*) get a number like that after analyzing a select group of stocks (S&P 500?) for a limited timeframe, but hindsight is 20/20.
Re:Silicon Valley Business Model is Dead (Score:1)
Microsoft still pays out a $0.08 quarterly dividend. I am not a MSFT shareholder, but I found out in about 1 minute of searching. For those who would like to know, go to finance.yahoo.com [yahoo.com] and type in "MSFT", click on "SEC Filings", click on the full filing for the latest quarterly report, hit ctrl-f, type in dividend. You see that they declared a dividend on March 27, 2006 payable on June 8, 2006, and have been paying a regular dividend since July 20, 2004.
Re:Silicon Valley Business Model is Dead (Score:4, Interesting)
I think that you are sort of right, but only accidentally. I'm talking a little out of my zone, but I think this is right (and Investopedia seems to agree [investopedia.com].
If a company is confident that it can take a dollar of profit, invest it in its own operations, and yield a return substantially higher than an investor could by receiving that dollar as a dividend and investing it somewhere else (accouting for risk, task implications and such), the investor is better off if the company re-invests that dollar (which would ultimately lead to a more valuable company and thus capital gains). If a company is mature and/or can't generate a lot of incremental profits from re-investing that dollar, it should kick it out to the shareholders, and let them figure out how to allocate it.
So as Dell's growth slows down [yahoo.com], it's ability to generate more profit through re-investment of profits diminishes (yes, it's a lot more complicated than that). So the logic dictating retaining profits vs. paying out dividends may very well change- let's see what Dell does.
Re:Silicon Valley Business Model is Dead (Score:2)
Basic business logic was developed when factories produced physical items not ideas. MS sales of windows XP don't depend on a huge factory that nee
Re:Silicon Valley Business Model is Dead (Score:2)
1: Which one of the following people advocates firms paying dividends?
a) This A.C. poster
b) Warren Buffet
2: Which one of the following people has a greater net worth?
a) This A.C. poster
b) Warren Buffet
All in all, it pretty much speaks for itself.
If I was Michael Dell.... (Score:5, Funny)
(Oct. 6, 1997)
Re:If I was Michael Dell.... (Score:2)
With all that cash in the bank, that's all the more reason to cash out rather than piss all that money away on some failed business venture. Apple is actually pretty lucky to be around today. If everyone else had thought that the original iMac was as ridiculous as I thought it was, it probably would of been the end of the line for the Macintosh.
Re:If I was Michael Dell.... (Score:2)
Except it wasn't pissed away on some failed business venture. It was invested into new products that performed quite well for the company. If Apple didn't have that cash socked away, they probably wouldn't have survived. Another case study of why a company needs to keep cash on hand and not satiate the short-term desires of investors.
Re:If I was Michael Dell.... (Score:2)
That in turn drove the value of AAPL (market capitalization) above that of DELL.
You can buy Dell stuff all over the place (Score:5, Interesting)
Re:You can buy Dell stuff all over the place (Score:1, Informative)
Re:You can buy Dell stuff all over the place (Score:3, Informative)
Re:You can buy Dell stuff all over the place (Score:2)
The dell LCD's get pretty damn cheap when you have the right set of offers going for you.
Really though, for their computers, the direct model is really all that dell has going for it. You can buy online and get exactly what you want (though you usually pay tax now) delivered to your door for a decent price. The systems arent the quality they were years ago when
The Bribe factor. (Score:1)
A Company I worked with bought dell pcs via a reseller (refurbed) like this way before, would i buy a dell pc (with microsoft tax) no.
Dell pcs where ok, its paying the Dell 'Billy Tax' that I'd rather not pay that or $100 to put it in a box f**k off.
Thats when a reseller has influnece - web pricing might be good for 1 off suckas, but multiple boxes its plain dumb. While I dont respond to bribes there are reseller out there who had to bribe government it employees with ps2's/xbox sort of thing to sell
the future? (Score:3, Interesting)
This new "secret" channel may be their way of testing a new innovative model.
Re:the future? (Score:2)
Time has passed and now everyone can offer direct sales. There has never been a time when all "middle men" were all useless pure-resellers. Often they value add, often they hit markets that the mfg can't reach. This is particularly true for corporate accounts. Dell u
Re:the future? (Score:2)
Since Dell's inflated stock price is based on growth, they're kinda fucked, just like Microsoft.
I though everyone knew about this (Score:3, Informative)
Re:I though everyone knew about this (Score:1)
We have been a Dell shop for years. We've watched the quality of their support fall, and even ordering equipment can be a chore at times. But it's helpful to have a lot of hardware under one service agreement (the devil you know, etc.) We have been buying odd peripherals and software from a VAR, who recently told us they could process Dell orders for us as well. We were stunned - someone else deals
Where's the V in VAR? (Score:5, Interesting)
In fact, they're successful with this model precisely because they're direct channel models is so successful. With our customers, they often specifically request Dell computers and they generally know exactly how much they cost.
Re:Where's the V in VAR? (Score:2)
I thought Dell's pricing varied quite a bit, depending on which division of Dell you bought the unit from, by the day of week, by the volume sold on a large order and what other discounts you've managed to fenagle.
Re:Where's the V in VAR? (Score:2, Informative)
wong V (Score:2)
Re:Where's the V in VAR? (Score:2)
Can you say "System Integrators?" (Score:3, Funny)
Company: I want a Dell XYZ for $1500
Integrator: ($1500 x
Integrator: No Problem, we should order it by tomorrow.
Plus, the Integrator/consultant that actually signs up with dell usually gets to avoid the script-monkey level of Tech Support.
Re:Can you say "System Integrators?" (Score:1)
Re:Can you say "System Integrators?" (Score:4, Interesting)
We used to move about $40k-$60k a year in Dell hardware (not huge, but not too bad for a small firm) and we got a whopping 3% discount. Not even close to enough money to cover my time spent jumping through the stupid hoops that Dell made us go through to be a VAR. Also, my "dedicated sales rep" treated us like crap. I mean, really bad. (He once told me "You don't move enough product to warrant my time right now. I'll call you next week when I'm not busy.") I know he probably gets six figure deals and we were peons to him, but honestly, with the way he treated us, I had no incentive to sell more of their merchandise. The $50k was only when people specifically asked for Dell hardware. Towards the end I stopped recommending it altogether, then we switched to other hardware providers. If my story is typical, then I can see whey Dell is sliding.
I thought they kept sliding (Score:2)
EG: Dell sets up Latitude markX support in ???? with outsourcer. Outsourcer knows shit about the product & uses script extensively. Customers start complaining that support sucks (which it does). After six months of this two things happen: 1) Outsourcer has memorized the script & can shortcut it (this means better TS). 2) Dell (likely not liking the repair rate going up) states
Re:Can you say "System Integrators?" (Score:2)
Re:Can you say "System Integrators?" (Score:1)
Check Costco for occasional big Dell discounts... (Score:5, Interesting)
Of course, no custom configurations...but the product does ship directly from Dell with Dell warranties.
For some reason, Apple seems to dump EOL equipment thru Costco too.
Re:Check Costco for occasional big Dell discounts. (Score:1)
Re:Check Costco for occasional big Dell discounts. (Score:3, Informative)
Re:Check Costco for occasional big Dell discounts. (Score:2, Informative)
Re:Check Costco for occasional big Dell discounts. (Score:4, Interesting)
I just purchased an E1505 directly from dell.com . It was several hundred dollars cheaper then the comparable models at Costco.
The Dell deals really require some understanding of the Dell rebate process, and close monitoring of the different deals. It's a little sleezy. I missed a $585 off coupon the other day when it expired at 10:00:00PM Pacific Time. I missed the coupon by 30 seconds (I entered my credit card number, hit submit, and the price on the _very_last_ confirmation screen jumped by $585. Dell support also closes at 10:00PM, so I couldn't call anyone.
Costco doesn't have this headache.
build your own (Score:1, Interesting)
I taught myself to build computers, and I look upon it like a jigsaw puzzle for 5+ year olds. It's very hard to do something wrong. And there's only one piece (usually) for one hole. (Save for the tough processor clips)
Granted building your own box still takes more time than just taking one out of the store, but it's only like an afternoon if
Re:Two critiques to your post (Score:1)
Re:Two critiques to your post (Score:2)
And software. Let's face it, it would be hard to piece together something with a monitor and windows for $400. I'm not saying you can't do it, and i'm not saying you'll end up with a better product, but given that a motherboard worth it's salt costs about $100, a cpu worth it's salt is about $50, and windows it self is about $100, plus case, monitor, side of ram, and drives. And lets not forget trivial
Re:build your own (Score:3, Informative)
Building your own PCs isn't any great skill. Anyone can do it. But there's really no REASON to do it. It's *cheaper* to buy the pre-built machine from Dell. Building your own PC almost never saves you any money, and hasn't for years. Seriously, can YOU build a complete PC, with a monitor and a legit copy of Windows, for $400?
Now, once you start spendig BIG BUCKS on a PC, then it can be cheaper to build your own. Sometimes.
Re:build your own (Score:2)
Re:build your own (Score:2)
keyboard
mouse
monitor
speakers
crappy sound card
crappy onboard ethernet
crappy custom case and power supply
I don't need 3/4 of their 'system'. I either have good components and just need a new 'cpu' (mobo, cpu, ram, maybe case+ps). but buying dell often means a lower quality video card and all the rest.
in the end, its MORE expensive to buy their stuff. unless you are starting entirely from scratch and have no components at all to start with.
It's my hobby! (Score:1)
Is it so wrong to enjoy assembling computers? It is, after all, grown up Lego with higher stakes for when you get it wrong...
Re:build your own (Score:2)
This isn't a scandal on Dell's part; they've made their bed (creating the idea that a low- to mid-range computer should be as cheap as you can get them from Dell), and now they're turning tricks in it (whoring their cheap low- to mid-range computers to VARs), because it makes sense for them (they sell more compu
Re:build your own (Score:2)
Best of luck to you in your endeavors as well. I have no interest anymore in maintaining other people's computers, so I quit building altogether for people other than immediate family. For those of us who "get it", your computers are m
Re:build your own (Score:1)
I spent $2600.00 on it. I've glanced at the price of individual parts (at their parent company which happens to be the geek shopping haven known as Newegg.com) [newegg.com] and based on my preliminary findings, yes I could indeed have gotten the parts for less money than what I paid having them put in a PC they built for me.
For example, I noticed my video card (NVIDIA GeForce 6800 GT) was about $80.00 less at Newegg. But here's
Re:build your own (Score:2)
It's not a troll, but it's offtopic. Anyway yes, computers are easy to build but they don't come with support. Unless you have the troubleshooting skills (which you may need during your first start-up if you have bad components, or driver problems) you should not build a PC, you should buy one, from someone like Dell.
Also, the fact that computers are easy to assemble is a new phenomenon. Before ATX you could hook your power cables up wrong and fry everything in your system. These days, as long as you pu
Re:build your own (Score:1, Informative)
Also, it's one thing to be able to assemble a computer from commoditized parts, but it's often a whole another thing to be able to get the parts w
Re:build your own (Score:2)
It's pretty much true that you can take any random Dell, and so long as it isn't a high end machine, the comprable machine built out of components i
BYO is only half the battle though (Score:2)
It's the remaining part that is hard:
1) Power up; diagnose any problems that prevent a full boot (bad RAM? bad motherboard? bad BIOS setting? bad HDD? bad ODD?)
2) Install the OS; diagnose any problems that prevent a full install (motherboard drivers? GPU drivers? drive controller drivers?)
3) Boot the OS; diagnose any problems that prevent a full boot (bad configuration? out of date drivers? bad component?)
4) Install additional dri
Re:build your own (Score:3, Interesting)
Ok, ok, my first computer was actually a Heathkit, all the parts came in bags, and there were detailed instructions and troubleshooting guides. But I know a guy who put together his own Z80 based computer just by reading the spec sheets.
Re:build your own (Score:2)
The appliance model, home delivery, no assembly required, service under warranty, is what sells Dell to the middle class.
Re:build your own (Score:1)
Re:build your own (Score:2)
But yes, building one computer might save you money but building 10,000 willl cost you a lot more money. Bussiness don't buy one com
defeat (Score:1)
The posts after mine have given me a different perspective. I'm still for what I said originally, but you do gain a bit of perspective on a site like this.
I got proved wrong, but gained some insight. Thats enough for me.
Feeling the squeeze (Score:3, Interesting)
Anecdotally -- my employer (~90 employees) typically leases computers; at end of lease, we either buy at $1 or return if we have FMV purchase option instead on the computers. Past two years, we've not been leasing new boxes except for the art/design teams who need Macs. Instead, we've been replacing individual boxes as they go.
We're still getting Dells -- but now getting them through a VAR (Zones and/or PCMall, if you're curious). Since we're not buying 20+ PCs, it's more expensive to go through Dell than through the VARs -- and honestly, more of a PITA, since the VARs bend over backwards for us.
There are a ton of companies like mine, and Dell would be moronic to not want our business. If Dell needs to sell indirectly to get the business, they'll continue to do so.
Of note, though, we still buy our service contracts direct from Dell -- and that's where they are making a ton of cash off us. And the poor VARs aren't making anything off us except for when we buy peripherals, since the margin in the boxes is almost zero, and we're going to Dell for the service contracts.
Re:Feeling the squeeze (Score:1)
Re:Feeling the squeeze (Score:2)
Dude... (Score:5, Funny)
Direct-sales cheating (Score:1)
Rent to own crooks (Score:1)
EVERYTHING at "Rent-to-own" stores is like that. For some reason people find it easier to pay $13/week for two years for a furniture set instead of setting aside the same amount for one year.
Just another example of the poor being kept poor by lousy decision making skills. Another example is trailer houses that are so cheap to live in, but heating costs $650/
Re:Rent to own crooks (Score:2)
It never made sense to me. It cost more than renting, and after 30 years you have a broken-down worthless trailer that costs $400/mo just to exist.
Re:Direct-sales cheating (Score:1)
Re:Direct-sales cheating (Score:1)
Owning the customer, eh... (Score:2, Funny)
Yeah, I got owned (Score:4, Informative)
I think they mean pwning.
Last year, I bought a new Dell workstation for work, the first of several workstations we were going to evaluate to replace our aging machines. Price on website: $1300 and change. But the website was flaky, and I couldn't complete the order. I called, got an "account manager", who took the product numbers I had written down from the website, and we ordered it--only to have the total come to $1400 and change.
I called back to complain, and the account mangler very rudely refused to do anything to help resolve the situation, boldly lying about one of the options I had purchased as an add-on supposedly being included in the base price. Eventually he said, "I don't know what you expect me to do about this," and wouldn't say anything else.
Needless to say, today we are an all-HP shop. We have a local reseller who provides excellent on-site service, and who I can reach directly; no IVR, no switchboard; I call my tech directly.
This site will never buy another unit from Dell.
I complained about getting "owned", got a rebate (Score:2)
I ordered a Dell 20" widescreen display; but I missed a deal posted on hotdeals by a few hours, so
Re:Yeah, I got owned (Score:2)
I have HP equipment and can say the same about support.
HP has the best support staff and excellent equipment (higher end for me).
I'm a very happy customer, but they make it hard to buy their equipment for some reason, maybe I need to find a reseller?
I really don't want to sell Dell, but... (Score:3, Interesting)
My experience with Dell servers is not positive. Call it anecdotal, but I see amber lights on Dell equipment more often than on every other piece of equipment in the datacenter. This is true for Dell shops and mixed shops. This is also true where there are only maybe 2 or 3 servers from Dell in the mix of other stuff.
Motherboard failures, PERC failures etc...
When I sell an HP server, I sell something that I can trust. The truth is, however, that corporate desktops are throwaway boxes. I don't care if one of them dies and keep a spare at hand.
Re:I really don't want to sell Dell, but... (Score:2)
Re:I really don't want to sell Dell, but... (Score:2)
Two issues are discussed.
1. I won't sell Dell servers unless not doing that will cause me to lose a deal. I'll assist my customers to order from Dell, but I don't see a point in having a channel relationship with them like I do with HP. I've talked to enough Dell resellers...
2. I I have a really hard time selling HP workstations when Dell basically gives away their equipment. Corporate hardware is overkill for most users, so it simply doesn't matter. I have to explain that there are no
Re:I really don't want to sell Dell, but... (Score:1)
Hooray for buzzwords.
Hmmm... (Score:2)
PERC... good hardware plus shitty Dell firmware. What were they thinking?
Re:maybe someone elses sales force wouldnt suck (Score:1)
Woot sells Dell stuff all the time! (Score:1)
Not for long... (Score:2, Informative)
Re:Not for long... (Score:2)
here's the problem (Score:3, Insightful)
Nothing more to really say, I'm sure everyone reading this has had trouble with Dell support by this time.
Wall$treet (Score:2)
If Wall Street really believes that, then that just shows how stupid Wall Street can be.
Wall Street's purpose is to be stupid (Score:2)
Big vs. Small fish (Score:3, Informative)
I hope Dell's listening, because I've been buying Dell personally for a long time and my XP400 while a good machine, didn't come with a restore disk (lame) and had so much 'trialware' running it was killing my performance. I just had to wonder what a non technical person would do. Is it about the price or the customer? IMHO Dell's going to lose market share.
Here's a good war story, my 5160 laptop USB ports went dead, I think due to a power surge. I called and spoke to 'India' to a very very pleasent person, but couldn't do anything outside of the script. They finally agree to replace the motherboard (after having me check lots of things). I travel a lot, so the local VAR calls me and we make an appt. for 2 weeks out. He calls back and says that he had to return the part because the ticket was open to long per Dell. I had to call Dell support again, and again go through the script, and they wanted me to do every test again (30 minutes). I played along, because I needed my ports and there was that this guy was going to comprehend the situation. After both the Dell calls, they ask, would you talk to a supervisor about your experience. I did both times. But, the second time, I told them the story and I don't think it meant anything to the guy, because it probably didn't impact his pay. I got a 'ok thanks'. (No thank you)
So Dell had to take two calls at 30+ minutes a pop. Dell mailed the motherboard twice to the VAR and 1 time back to Dell. I had to sit on the Dell support line for an additional 30 minutes, but luckily they gave me another code, the VAR got the motherboard back and he fixed my laptop before I headed on another trip.
Did Dell save money on that transaction by outsourcing? Probably, but it's short term IMHO
For more discussion on Dell negativespace2005-Dell at yahoo dot com
Dude!! Can I get an AMD with that? (Score:1)
BTW
I'm currently dual booting on a Shuttle box that has XP Pro and Red Hat FC5 for 64-bit AMD. The XP Pro is such crap with all of the security patches and Norton that I could get quicker responses out of my old 486 Gateway running OS/2 or Windows 3.1 but enough of that.
Dell stopped giving me
How does Dell make money? (Score:2)
* Cheap/overpriced video card
* Cheap/overpriced hard drive
* Integrated (i.e. cheap) motherboard
Thus, if you want a Dell with nVidia GeForce 7900, you're going to pay $500 instead of the $400 cost. Same for the hard drive...upgrades to Raptors are more expensive than the price differential. It's all very clever, but it amounts to exto
Did I miss something? (Score:1)
'If you look at Dell's stock versus HP's, part of the difference has to do with Dell's reputation for owning the customer. There's a sense they own the entire margin and have higher profits because they sell directly. It makes them appear more valuable to Wall Street.'
What?
http://www.google.com/finance?q=HPQ [google.com]
http://www.google.com/finance?q=DELL [google.com]
Last time I checked HP's stock is HIGHER than DELL's. What gives?