Dell thanks Intel
The increasing sophistication of PC's may at last be dealing the direct-sell vendors the cards that the reseller business has been hoping for.
When this issue of Dealer Info goes to press, Dell Computer has issued a fourth quarter profits warning. The late-January revaluation means that this is the second quarter in a row that the mighty Dell has warned of a profits shortfall.
This time the reason is a shortage of Intel processors, it seems. While fourth quarter sales are expected to be 30 per cent higher than a year ago, Dell says that this is around 15 per cent short of analyst's expectations.
Interestingly, Intel has put its hand up and admitted that it is having difficulty keeping up with demand for Celeron and Pentium III chipsets. But, we note, who else is complaining?
IBM moves direct staffers over to indirect
IBM's strategy of selling its PC's off-the-page in national newspapers in the UK may not be working, as the firm has announced a global plan to move 25 per cent of its direct salesforce over to the indirect side to boost sales through dealers and other indirect partners.
Speaking to 5,000 attendees at IBM Partnerworld in San Diego during January, Buell Duncan, Big Blue's general manager of sales and distribution, said that the move will effectively triple the number of IBM staffers working with the indirect channel.
Revealingly, however, he said that the plan is to pay their staff solely on results. Commission-only sales staff programs have worked in the past in the UK, this writer notes, but the staff have to be the best in their class, meaning that only a few survive.
But to apply this strategy on a global basis, to sizeable numbers of staff? Highly questionable.
Duncan explained that, during 1999, revenue through the indirect channel worldwide had doubled to $30 billion, making indirect sales responsible for a third of IBM's total business.
The remainder of IBM's global sales staff, he went on to say, will concentrate on the firm's 1,500 largest customers around the world.
Ingram resellers are told to buy on the Web
Ingram Micro has taken the incredible step of blocking around 10,000 resellers in the UK from negotiating sales with the distributor.
The firm says that it wants them to start sourcing their kit via the company's Web site.
This take-it-or-leave it approach is defended by Greg Finney, Ingram Micro's marketing director, as a strategy for keeping prices the same for resellers, whether they buy on the phone or on the Web.
This strategy is fine for small orders of one or two PCs, but, traditionally, if a reseller is lucky enough to have a larger order - say for 30 PCs - then negotiation is the order of the day.
If prices remain static for PCs, no matter how many are sold, dealers have to meet large orders from customers with discounts of their own, eating in to precious profit margins.
Trade reaction has one of horror to news of Ingram's move, although, fortunately for dealers, no other distributors have followed suit, so it looks like Ingram Micro may well have shot itself in the foot as far as major orders are concerned.
KPMG set to become a reseller
KPMG, the IT, business and accountancy consultancy firm, is quietly working on plans to become an IT reseller, according to Microscope, the UK's weekly trade newspaper.
The paper reports that KPMG has been talking to Compaq, HP, and Oracle, quoting Paul Witting, the consultancy firm's partner in charge of SAP consulting.
"All the vendors were keen, with the exception of IBM," he told Microscope, adding that he had not expected any interest from the company owing to a potential conflict of interest with its IBM Global Services operation.
The only good news is that Witting added that KPMG is planning to concentrate on the higher end of the market. This, at least, leaves the way clear for the smaller dealer to retain market share.
PC World offers free weekend Internet calls
PC World, the retail arm of the Dixons group, is offering a unique Internet package to its PC customers - free weekend Internet calls if you buy a PC from its stores.
Dixons is, of course, also the parent company to Freeserve, the free-to-subscribe Internet service provider (ISP) that floated last year. While the ISP's share price has gone through the roof, Dixons still has the lion's share of its stock, allowing it to do special deals that few other firms would touch.
Customers who buy an 800 pound Patriot C500 PC will get a years-worth of free weekend Internet calls by using a unique toll-free number for their access. Calls made outside of the weekend are billed at special rates, so not appearing on user's phone bills.
The move is a shrewd one by the retailer, as many people are worried about their potential phone bills when they get a new PC. And, with phone calls of a penny a minute at weekends via British Telecom (BT), the deal is not that fantastic - especially when you realise that some ISPs are offering free calls at weekends in return for Internet calls being made across their networks at other times.
The killer, however, is that PC World is one of the largest PC retailers to the general public, meaning that it has a large captive consumer and business market.
Andrew Gabriel, the firm's marketing director, said that retailer's objective is to offer our customers the best PC packages available.
"The Internet is being adopted by more and more PC users every day and this is an excellent, value for money offer that is ideal for first time buyers or families looking for a second budget PC," he explained.
Apple continues to upset its UK dealers
Hard on the heels of last month's shuffle at Apple UK's headquarters that resulted in the UK offices becoming little more than a direct-sell operation, Apple resellers are reported to be ever more displeased with stock shortages.
In November of last year, dealers criticised Apple for delays in shipping its products in the UK, claiming that the firm had once again miscalculated demand for the machines. At the time, Apple promised to sort out the problems.
Reports suggest that, two more months down the line, supplies of Mac hardware continue to be in short supply. The latest issue of PC Dealer, the weekly trade paper, quotes Nigel Lomas, marketing manager at Trams, and Apple reseller, as confirming product supply as being tight.
"It has been extremely frustrating, as supply from Apple has been up and down. In a way, we have suffered because of healthy demand," he said.
Ron Collins, CallSaver's sales director, meanwhile, told the paper he was "fed up" with Apple, and claimed that the vendor has "starved" the UK of products.
IBM UK, 0044-1256-343000 (GB), http://www.ibm.com;
Ingram Micro, 0044-1908-260422 (GB), http://www.ingrammicro.co.uk;
KPMG, 0044-20-7311-1000 (GB), http://www.kpmg.co.uk;
Dixons, 0044-1442-354515 (GB), http://www.pcworld.co.uk;
Apple Computer, 0044-20-8218-1000 (GB), http://www.apple.com/uk