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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (51374)	7/14/1998 10:56:00 PM
From: KVASIR	Read Replies (1) \| Respond to of 176387

here's an interesting memo I got ahold of...just fyi and good reading ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^ DELL FLASH #7 ^ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Below is a recap of a meeting that a Dell Area Director of Sales had with a new Dell Sales Rep. on the SR's first day on the job. The conversation was overheard by an IBM Sales Manager. Although the conversation took place in August 1997, the information provides good insight on Dell's attitudes and philosophies for penetrating major markets. On some points I have included a "NOTE" which can clarify points and offer a strategy or tactic to help you gain a better understanding of this competitor and how you can compete with them. And the conversation went like this... - Dell's theme is "Just go for it, and have fun doing it!" - Dell's number one focus is MARKET SHARE. - Dell's mission is to identify key Compaq, IBM and HP accounts in specific industry segments and buy MARKET SHARE. - Dell will go as low as COST -32% to win these accounts. NOTE: In large accounts ($2M+ opportunities), Dell has been known to provide deep discounts off their home page price (qty. 1) to win the business. It is important to note that the 32% discounts quoted are off of Dell's home page price. -This discount can range from 15% to 40%, depending on the account and family of PC involved. -Mobile discounting represents the lower discounts, possibly due to out-sourcing of the product and lower margin. -Servers are on the high end of the discounting scale (this is an area that Dell has committed to grow). - At Paine Webber they are already at COST -27%. - Dell was very surprised Paine Webber asked IBM to rebid. The key is not to beat the competition by $50, but to beat them by $200, $250, and $300. - They are clearly focused on Compaq. They view IBM as a competitor, but, not like they do Compaq. - Dell reps are being incented to SELL BELOW COST. - Their strategy is once they get into the account, they can begin to increase their margins to a point that is around COST +10%. - They feel this will take anywhere from 30 to 180 days depending on how deep they had to go to win the business. (e.g. The Director of Sales mentioned that it would take 120 to 150 days to recover from the Paine Webber deal). NOTE: It has been shown that when Dell wins an account using their "Home Page Price Minus" strategy, over time, "price creep" occurs in these established accounts. Be certain that your customers are aware of Dell's "Get their foot in the door and then increase margins" strategy. - Dell will "speed up" the "end of life" on current products. NOTE: Dell always touts a commitment to their corporate customer to minimize product changes, especially important for customers with large PC roll-outs. Dell documentation states that they reserve the rights to change system models and components at their discretion. - Dell's first customer call is simply to tell the customer that Dell can sell a 233Mhz system for the price of the competition's 200Mhz. NOTE: You should point out the fact that technology is constantly changing and by following this technology "carrot" your customer will always be chasing the "latest and greatest" technology, never being able to effectively manage the costs of their ever growing base of dissimilar installed PC user base. You should focus them on the importance of establishing PC standards that provide them with base technologies that help them manage their investment in PC's. So while the customer may not get the "fastest" processor available on the market, they are getting the best comparable technology available at a reasonable price combined with the tools designed to reduce their post sale support and management costs. - Price is key, and that's what they are being asked to lead with. - Dell is well aware of IBM's efforts to "bundle" and surprisingly, is very familiar with IBM's attempt to leverage the IBM company with cross brand identification. (The Area Director was not knocking this strategy). - The Area Director of Sales felt that IBM had the deepest pockets and could at any time create havoc within the industry. - Pride Technologies and Micros to Mainframes are their two biggest partners within NYC. NOTE: Some business partners like Dell because of the "drag along" services opportunity they create (that Dell does not do). Business partners that are fulfilling Dell may not be aware of the additional cost implications they incur by fulfilling DRM PC's. - Dell only likes to use a reseller if the customer wanted next day delivery. NOTE: Dell told a corporate customer that they would charge an additional $50 if the customer wanted guaranteed delivery within 5 business days direct from their factory. They are not loyal to the customer as business partners are. A good point to stress. - Approximately 8% of Dell products go through the channel. NOTE: A point to be made here is that Dell's "Achilles Heel" is in their lack of personnel to perform services; they out-source this resource - limiting their ability to control and support their corporate customers, especially in the high end PC and Server areas. - Dell will offer "give aways" (e.g. Buy 100, get one free, buy 1,000, get 50 free). - Dell does have a SPECIAL BIDS office. It seems that Dell does not require competitive information from the rep. The rep. simply tells them what is needed to win the account. - The "good reps." apparently have a very strong relationship with the VP of Finance. They will contact the VP directly and cut the deal with him/her. The justification is the opportunity of a new targeted account. NOTE: This is consistent with Dell's strategy of working on the Finance/Procurement side of the house to drive decisions, rather than our Vendor partners whose strengths historically lie in the I/T side of the house. - No deal is turned down. - Dell does have Systems Engineers, however, they are primarily used for break/fix, not pre-sales/post-sale opportunities.