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Technology Stocks : Dell Technologies Inc.
DELL 122.70+0.2%Nov 18 3:59 PM EST
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To: The Phoenix who wrote (66652)9/22/1998 1:15:00 PM
From: Chuzzlewit  Read Replies (2) of 176387
 
Gary, I've thought long and hard about this problem because I initially didn't appreciate the subtleties involved. So the parameters I laid out are these:

1. A direct model is aimed at corporate customers;
2. A direct model is aimed at savvy retail customers who are at least second time computer buyers;
3. JIT manufacturing does not work without the establishment of a direct model.

Therefore, I eliminated the retail market as a consideration.

The problem that the indirect model created is that the connection between the company and the customer is the channel. The channel is acting as the salesman. That is where a great deal of trust is built. So when a company tries to eliminate the channel the channel can respond by either building its own box (didn't Ingram take this route?) or switching its representation to another manufacturer. In either case the original manufacturer would take quite a hit for at least the short term.

You made one suggestion which is quite workable, and in fact is being implemented: emulate the model in emerging markets. Compaq is doing just that. But that will continue to leave the major established markets in the hand of the resellers.

Gary, I firmly believe that the more detail you bring to bear in thinking about the transition (and detail is the key!), the more you will be convinced that a conversion to direct marketing does indeed have formidable barriers.

TTFN,
CTC
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