Dell computer in canada

For the past two years in the United States, Dell Corp. has been openly building a reseller channel for its services and products, diversifying from its direct sales model.

Less known is that the company has been quietly and slowly building a Canadian channel aimed at small business customers, allegedly demanding from one reseller its customer list in exchange for the right to sell its product--with no margin.

Some resellers have joined what Dell calls its Solution Provider Direct program, a sign of the power of the company's brand.

VARs here are reluctant to talk on the record about joining Dell's Solution Provider Direct program for fear of upsetting the giant.

Even Dell won't talk about its Canadian strategy, preferring to issue a terse e-mail statement in response to several interview requests.

"Through Solution Provider Direct, Dell is providing Dell-manufactured systems direct to the SP market so this unique, valuable customer segment can take advantage of our high-quality, low-cost systems," the statement said in part.

Dell believes Solution Provider Direct is another way to reach the small business owner and does not publicly release how many solution providers are in its program.

CDN has learned that there are at least two. Both based in Ontario.

Resellers have mixed feelings about Solution Provider Direction. CDN spoke with three VARs about this story on the condition of anonymity.

A Toronto-based national solution provider was approached by Dell Canada within the last year to become an authorized dealer in exchange for making zero margin on hardware and handing over its client base to Dell.

"You may as well fold your tent," said a company spokesperson. "If you're working with the major brands like IBM, HP and Toshiba, for example, I don't know why you would want to sell Dell and get paid nothing for that. When we were asked to disclose our customer list under the auspices of looking for conflict, that was a non-starter."

However, an Ottawa-based solution provider says he is making "more than a few points" reselling Dell-branded systems and providing service. His company has been selling Dell PCs and servers for about three years now and deals with an account rep at Dell "Why fight them?" he asks. "It's not a long-term situation. There are certain things that you do that are very strategic and this is probably more of a stop gap measure more than anything. You're providing a solution to a customer right now that just happens to be Dell."

A Manitoba-based system builder said he has had some experience with the Solution Provider Direct program through companies that his business deals with in the U.S.

"They're trying to be all things to all people and failing miserably at the execution," he said. "It's the ubiquitous nature of the Dell name--people hear it and think it must be good."

Unisys, one the companies that Dell outsources service on its servers to, sub-contracts service work to this system builder. But the percentage of revenue from the service, he said, is "miniscule."