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To: Chuzzlewit who wrote (44186)	5/21/1998 7:40:00 PM
From: AlanH	Respond to of 176387

CTC -- re:it seems to me that the arrangement of having both a service company and a reseller is redundant. One of the principal reasons for having a channel is service. Look at automobiles as an example. So if the company believes it needs a service company, what function does the reseller perform other than warehousing and distribution? Fair enough. I'd wager that most vendors evaluate that question from time to time, seeking to understand where 'value-add' exists. For the consumer, a storefront with a modestly educated staff is adequate. For major corporate customers, the vendor would ideally establish a tighter relationship -- possibly direct (with some overlap in product fulfillment). At other levels, channel competition is encouraged with true value-add players contributing in specialized areas. (The value-add players may have some vertical or application expertise.) Granted, internet tools are flattening channels where clear value-add does not exist. The challenge is to provide myriad services through such tools; otherwise, the internet as a fulfillment vehicle tends to reinforce the commodity perception. (DELL is receiving favorable press on the internet front, although the service angle remains to be seen. Currently, the primary benefit is reduced cost of sale.) All things being equal, the question becomes how best to provide 'high-end' service that builds brand loyalty -- creating price elasticity. IMO neither the internet nor 'distributors' are effective. As a result, CPQ and DELL have scrambled to assemble more robust service solutions. (Product positioning has placed the burden of proof on DELL.) We'll see how it works. Cheers.