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Dell To Sell To Retailers
dmarx writes "The Boston Globe reports that Dell, which has heretofore sold only through its website, direct to consumers, will now sell generic computers to dealers. This marks a shift in Dell's business model."
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Dell is not selling to Retailers, no, you won't see that brand new shiny Dell in BestBuy or Circuit City. Dell is only selling 'generic computers' to dealers who in turns sell them to small businesses.
I thought true slashdotism (not reading the story) only happens to joe six packs, and no the editor..
geek page at KY speaks
As an OEM, it's hard to turn down retailers who are asking to resell your product. Basically what it boils down to is whether or not the retailers are cannibalizing your own direct sales.
Dell has made an enormous investment in proving themselves to be a good online/catalog source for PCs. Direct sales are nice - you get fatter margins (my guess is 20 to 35% for Dell) and all you have to do is stick the labels on the boxes. Compared to the cost of manufacturing a PC, the cost of sticking labels on 100 invidual boxes vs shipping one big box of 100 pcs is negligible. The sales work is completely automated now.
What Dell needs to ensure is that their retailers are reaching *new* markets - people who would not have otherwise bought a Dell. The worst case scenario is that people browse their web site to get the technical specs and pricing, and then head down to their local retailer to actually buy it. Dell still sells the same number of units, but they make $200 apiece instead of $400.
My company makes *half* as much per-unit when we ship in qty to a reseller vs direct to a customer. We want out resellers to be happy so they'll promote the product, but at the same time we miss the margins for direct sales. You can't be greedy though. Sometimes a smaller piece of a bigger pie is better. Good luck Dell!
OK. Gotta sort this out here. If Dell sells to retailers (which will mark up the cost a bit to give them a profit, bumemr), what will Billy Boy and his gang in Redmond do? Will they adapt their license agreement (again) to force Windows onto these machines? Some retailers do sell PCs with vacant HDs, allowing for OS choice. I'm willing to bet MS won't take too kindly to that...
Or could this be a tactic to circumvent MS? If Dell sells directly to retailers, could they install another OS onto the machines (ie Linux, FreeDOS, etc)? Does MS's license cover Direct-To-Consumer PC makers adding in the retail factor? This is going to be an issue to keep an eye on...
Blog Prophyts - Right On, Man
Market tradegies typically indicate that a person must see, hear, think of (or in any type, come across) your comapny name or product 22 times before they will potential switch to you service or product. And the 'Dude' - "Steve" just stuck one more memory in your head.. Dell !
I'm sure that Dell's move to supply a generic model to retailers can and does have a more broad plan of attack then may be seen at first. Even if the end effect is jsut to have you think, hear and come across their name once more. Though by that time you have already purchased something of theirs.
Additionally in the current market, major companies are folding and buckeling under the current market strains. Comapnies need to diversify as much as they can to ensure that they are hear for tomorrow.
I agree with an early post from someone over at slimdevices that the profit margins are cut in half (if not more) but when you have the choice of cutting profits and staying in business or closing your doors.. well.. you decide.
Never try to beat a professional at his own game!
My guess is that they can sell it cheaper as a no name item since they do not have to handle:
1) Tech Support. This includes web/phone/email etc.
2) Advertising [this alone would be around %3-%5 of a machines cost AT LEAST...
3) R&D wrt design and "dell" labeled cds/manuals/etc... [they dont have to reprint the OEM manual with their own logo] and still use essentially the same parts.
4) This could also be a way to get around certain restrictive licensing agreements that Dell has... [ie: if the machine has the name "Dell" on it they may have to pay some company something to license something else.. weather its software/bios/whatever]
All the above could EASILY make a PC %20-%30 cheaper for the end user...
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Time is on my side
Can you get a powerbook with no operating system installed? Wow I didn't know that...
I remember the first time I saw a Dell computer. Being from Austin, I took a tour of the Dell facilities when I was in high school, and even met Michael Dell. That was in 1990? 1991? But the first one I saw for sale was in a department store in Toulon, France in 1993 or 1994. I probably would not have taken note if I hadn't been on the tour...
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