Compaq's CEO speaks out on channel selling as a strategy, in a CNET interview dated today:
"Q: You spoke about direct vs. indirect. How do you plan to solve your distribution problems?
"A: The market has already decided [about] the traditional two-tier distribution model. The traditional two-tier model where you put inventory into the channel and let people buy inventory out of that channel--that model can no longer work. That's clear now.
"What that says isn't that the channel itself is a dirty word. It's just that you have to reengineer the process and the channel fits the role of, one, being an extension of your sales force into those markets you can't cover through a cost-effective model; and two, in all areas, they add value-added services downstream. They do things that you cannot do better, whether that's the implementation of complex systems, whether that's burning in specialized software, or whatever that customer needs." [Emphasis mine.]
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All we are hearing from IDX is about their commitment to channel sales, and here their biggest OEM channel partner itself doesn't believe in simple channel sales, unless there is value added.
Does IDX get value added from CPQ channels? Not too much, especially since the channel continues onward from CPQ to distributors, retailers, etc., until there are usually five entities in a long chain. Do all of them add value? Or do some of them subtract value by inattention or incompetence? Is IDX being ill-served by such long channels?
IDX's deal with Digital River is an effort to avoid this kind of channel selling everywhere. But can IDX do more to get the best results out of its channels? Like keeping some IDX presence along the channels, or working to shorten them? IDX really needs to succeed in the PC market, and they want to. The question is, have they adopted an outdated business model to get the job done? |
