re: channel price cutting
"We'd be in a competitive bid situation with a couple of hundred units, and even if I'd give up my 4 points of markup, I'd still be 10 points off," said Mike Steffan, president and general manager of operations and distribution at Inacom Corp., Omaha, Neb."
==> Channel's profits, already slim, getting squeezed, because DELL can sell more economically (approximately 14 points??).
==> Looks like the posts indicating channel profit being derived from software and auxilliary equipment were on target.
One channel executive said his organization's initial allotment of money from HP was twice that being offered by Compaq and IBM. The HP funds were quickly spent, but the company poured more money into the program, he said.
==> Direct sales are hurting the competition badly enough that they are forced to rebate their products.
==> When the channel handles more than one product, whose do they push? Probably the one offering them maximum profit. At what point does the effort to keep market share from DELL expand to "brother" channel corporations? Who has the deepest pockets and can afford to play the "sales at any cost game" longest? Probably CPQ.
Tell me again, someone, that "anybody can duplicate DELL's sales model" (Bill Cosby says, "Rrriiiggghhhttt")
Thanx for the post. 3 |
