TD,
RE: "Whichever case, it seems that the direct sales model has advantages over CPQ's.."
Direct sales seem to work best at the low end where computers are not too complicated. When you get larger business computers like the ProLiant Servers from CPQ, the build is usually, including the installation of an O/S, much more complicated. But these are not usually less than $5K systems and can range up to well beyond $50K.
Dell is competing in what some people here have referred to as "Desktop" PC. While those DeskPro models, compete with high end Dell models, there is a significant amount of "white box" (generic PCs) in competition as well (nearly 45% of reseller sales). We used to build those from components (also control the quality), but now can buy from several good clone integrators... and we do for resale to our customers who self service. If our customers want on-site fast response service we sell CPQ or other major supplier with service such as HWP or DEC or IBM.
Both CPQ and Dell,as well as HWP, IBM, DEC,... all the names, get hacked by "white box" component integrator/assemblers. Dell is one of those former white box assemblers. They have now become branded. They are just a very big assembler with the economies of scale that go with it. They are no longer "white box" but "dell box", but still just a box. There is little R&D and little value added other than assembly.
Direct sales work very well with "white box" or "dell box" PCs. IMHO, I think that the DeskPro (a super reliable system) should have been sold direct via web or mail order a long time ago. Having a distributor/reseller channel for different product lines is difficult at best. CPQ is shifting already.
Deciding upon and maintaining the Channel for a multi-faceted manufacturer (such as CPQ, IBM, HWP) is a complicated issue, good for a case study in MBA program.
RW |
