Originally posted by Rick Whiting, on CRN Jan. 25, 2013
Will Dell’s reported plans to go private have an impact on the company’s legions of channel partners? A plurality doesn’t think it will — and a surprising number think it will actually have a positive impact on the computer maker’s channel business and strategy, according to an exclusive CRN survey.
The survey, conducted last week, polled nearly 200 solution providers. Should Dell succeed in going private, 47 percent of those surveyed do not foresee any impact on the vendor’s channel business and strategy. Perhaps more surprising, 41 percent think such a move will have a positive impact on Dell’s channel business, while only 11 percent anticipate a negative impact.
[highlight type=”one”]”I believe that we can be more strategic and creative with Dell in a private environment than if they are public,” Bob Venero, CEO of FutureTech, a Holbrook, N.Y.-based solution provider whose Dell business was up 400 percent in 2012, told CRN after news broke of Dell’s possible plan.[/highlight]
[highlight type=”one”]”If this deal happens, we should see exponential growth beyond what we have seen today in our Dell business. I believe private companies can have more stable and consistent channel relationships because they are not always under the scrutiny of external requirements to support a publicly held model. If Dell wants to create a unique channel program with a subset of partners, it is a hell of a lot easier to do that as a private company than as a public company,” Venero said.[/highlight]
Venero’s right in that there’s a lot of potential upside for companies that go private — oftentimes, management can better develop long-range strategies without Wall Street’s constant demands for short-term financial gains. And that’s reflected in the CRN survey: Of those channel partners who see Dell’s privatization plans as a positive, a whopping 70 percent think a privately held Dell will be more flexible and more nimble in bringing technology solutions to market.
“Wall Street focuses only on short-term gains not long-term success,” said one survey respondent.
One partner said taking Dell private could improve margins all around in an industry where end-of-the-quarter discounting has become commonplace for publicly held vendors trying to hit quarterly sales targets to appease investors. Tight-fisted business customers have learned to demand bigger discounts at the end of each quarter, Peter Estes, co-founder and president of Portsmouth, N.H.-based Axis Business Solutions, one of Dell’s fastest-growing partners, told CRN. “The business community has come to expect it.”
Another potential silver lining: Fifty-four percent of solution providers who give a thumbs-up to privatization do so because they think it will allow Dell to more quickly integrate technologies the company has acquired in recent years into a more cohesive strategy. Another 37 percent think it will lead to improved technology offerings while another 35 percent believe it will lead to more focus on higher-end, enterprise solutions.
But the channel has its share of naysayers: Eleven percent of survey respondents think Dell going private will have a negative impact on the vendor’s channel business and strategy.
Of those, 58 percent think the privatization deal will lead to fewer resources being dedicated to the channel. Thirty-three percent think it will simply leave Dell distracted, diverting attention from the company’s channel efforts. Twenty-nine percent think Dell will be free to raise prices while decreasing reseller margins and profitability. And 29 percent see privatization leaving an opening for other computer manufacturers to gain market share.