Misc

Dell buys SonicWall: Partners Not Thrilled

Dell, through it’s numerous missteps in the SMB and MSP space, has earned a pretty ugly reputation with IT Solution Providers. Yesterday Dell announced the purchase of SonicWall and instantly angered partners who have working with one of the most beloved channel companies. It prompted me to ask, What has Dell done to deserve such hate?

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Yes, in the channel Michael Dell is often portrayed as the evil Dr. Doofenshmirtz, hell-bent on domination of the tristate area yet always foiled in the execution. Why are so many partners angry? I recently wrote on my personal blog about how IT solution providers often expect their vendors to behave much differently than they behave themselves. Seemingly Dell is doing what all the “channel experts” are telling their partners to do: market aggressively, make sure you sell everything connected to technology even if it’s digital signs and networked coffee makers, or someone will push you out of that account. Dell is implementing this very same strategy by expanding their portfolio so what is the real problem?

In short: Dell is getting better at directly competing with the channel.

What is becoming clear to many is that the hardware game may be coming to an end for solution providers. The only company making significant margin on top of the hardware business is Apple and they don’t make much room for anyone in their channel.

Where channel partners as a whole have a problem is that the suppliers are becoming competitors and the devices and brands that are out there are suddenly property of your competitor. Consider the following comments on Facebook regarding Dell’s acquisition, these are the answers to my question about why Dell is not getting any love:

Amy Babinchak: Dell has invested in becoming competition, an MSP of thier own. I dropped them almost three years ago now for this reason. I looked at the downhill slide of their service to me and their purchasing pattern and read the writing on the wall. 10 years in their solution partner program and we moved.

Angela: When I cannot resolve a problem because the person on the other end sounds like they work for Zenith, I’m done. It’s not to do with the accent but the lack of customer service that they both seem to have mastered. I’ve been ‘in the channel’ for 10 years and have learned that I can always find folks that actually care about my business (accent or not)

Eddie:  I have seen Dell hut to a customer only ONCE. However, we do not give Dell the end-user information and we do not register deals. If/when Dell asks for the end-user info we give them the end-user company name, but our address, our email and our phone number. I have seen it only ONCE where Dell sent a client a catalog – it was to our address. This single event was early in my company’s relationship with Dell (2008 for a purchase made in 2003), and I have not seen it since. Maybe we’re just too small for Dell to go after. I dunno.
But even if they did, WE are the trusted advisor – the client will not cut us out because they need us (still). If a client does price something directly from Dell, which happened a couple of times last year, I always match it and still make a profit on it. I have even had a client or two shop at Dell, send me the shopping cart, which i forwarded to my Dell rep for pricing, which was less than the shopping cart price, so I still made $ on it.

Randy: Dell doesn’t have much of a channel presence, unless you buy direct. Their distribution agreements are a joke, selling only previous model overstock with about 3% margins. I’ve been selling HP for 5 years now, and have never had to worry about them propositioning my clients directly. I hate Dell, but I love SonicWall, so now I have another decision to make!

Russ: Well Dell Can’t underbid me anyway because I don’t buy their $500 1 TB Drives.. I always buy drives some place other than Dell Besides Dell Drives only have a 1 year warranty, I can get 3-5 year warranty from the Manufacture for 1/2 the cost of Dell’s the problem I don’t like Dell is after they moved their Manufacturing to Mexico, The Server delays SUCK (Remember when a server came in 1 week, now it’s delay delay delay)

I mean really have you talked with Dell Support? I had someone talk with a new client for 3 hrs trying to get their wifi fixed on their laptop Dell said sorry it’s a software issue. They called me I had it fixed in 15mins So… I’m not worried about them taking over my support.

Joe: Ok, so hypothetically speaking say that Dell is welcomed with open arms to the channel and everyone in this market space embraced and started making all of their server and PC purchases through Dell, then started using their RMM, and then their free ticketing system. Sounds good huh… Until it affects your business model. Lets say Dell starts offering spam filtering, hosted exchange, and share-point with zero downtime and all for 2 dollar per mailbox per month with 10 year archive 30gb mailbox storage. How would that affect your business? And do you think Dell would be able to provide a quality product at that low rate? Probably not but they will market it more than you ever could and make the sale. You will be the “consultant” people call to actually make their stuff work when before them you just made stuff work.

Ben: I haven’t had a big problem with them, except a few weeks ago i called to order 10k in equipment, it took 2 days to get our rep to reach back to us. I missed the call, called him back 20 mins later, and emailed him the specs, now 5 days later and i don’t even have a quote … kind of annoying … usually i would build right on their site but i need a couple of custom licensing things handled that aren’t in the ‘wizard’ but a rep can get us in about 5 minutes.

Not to be outdone, Alex Rogers of CharTec has made sure to hop onto this opportunity to promote the CharTec UTM device. But what is there to say that CharTec, which is part of ConnectWise, won’t end up being sold to Dell or HP or another company that does not live up to the expectations of the resellers who suddenly find themselves competing with their suppliers?

One thing is clear: You can no longer ride your suppliers brand name in order to gain credibility because you’re assuming the risk of being displaced from your accounts by that vendor. So the question now is: build your own brand or carve out a niche of services and protect them.

5 thoughts on “Dell buys SonicWall: Partners Not Thrilled
  • HandyAndy says:

    It amazes me that so many people are up in arms for Dell doing exactly what Michael Dell said he was going to do when he started the business, he siad he was going to put all the little shops out of business and although it is taken him quite a while, he is still on course to fulfill his threat. The thing I have not been able to understamd all these years is why all these folks did business with him in the first place, I took him serious, I have never resold a Dell, if more had followed my advice instaed of worshiping at the atler of Dell, they would not be facing this threat today.

  • Russ (SBITS.Biz) says:

    I’m actually not surprised by Dell, Everyone is doing this, it’s a bottom line thing. It is really hard to find Value being a VAR anymore, Unless you sell $100K or more for a vendor it’s not worth big companies to even look at you…(Yes there are exceptions like Trend etc.) HOWEVER the Big Companies need re remind themselves it’s the little guys like us, who spread the news on a Like or dislike of a product. and not I’m not surprised by Dell attempting to steal my clients by underbidding me. 90% of Vendors are doing this. Not that it’s good business practices, because they are cutting off the hand that feeds them.. But I’m not suprised… And of course like Andy says, My Eggs are not all in Dell’s basket, or any ones.. Putting your Faith in a Vendor to Pull you along, is only for the foolish… Blaming Dell for playing hard ball to me is a little childish.. Just play in the area you are best in.. Honesty, Integrity, Quality, and Responsive and you will always have clients…

  • Kevin Baylor says:

    We haven’t relied on margins from hardware sales for years. It hasn’t been there. Fortunately we moved from Sonicwall 5 years ago and are Watchguard Partners, but The Big Red may change some day also. We are the trusted advisors that people look for and trust. Dell could not have been onsite today at a new client with a crashed server. The day Dell starts creating franchise MSP shops, for local onsite support, is the day the good, small local MSP will get squeezed out.

  • Randy in Atlanta says:

    I agree with HandyAndy. Dell courted us years ago. We too have never resold Dell. Now that they bought Appassure and Sonicwall, looks like I have to find new solutions. Such a shame. Anyone that supports Dell gets what they deserve.

  • The Writing on the wall for me was when as 1 million dollar year partner we had trouble returning items past 21 days…this was at a larger MSP.
    1. if you are making margins on Hardware as a primary source of income you are behind the times.
    2. Become truly vendor agnostic you will be amazed how freeing the conversations are we have minimal partners as far as hardware and i get to say we charge 10% to 15% over our cost and stick with it. If our clients want to buy hardware direct we let them! Making $1000 off of hardware has never made sense.
    3. Replace every sonicwall in your client portfolio. we are currently in the process of doing that as soon as we heard this, don’t want Michael Dell with a wide open look into our clients. :)

    The business decision behind this makes sense, it allows Dell to extend their offering to the end point of the customer and back up their MS offering. Don’t walk run away!

    on a side note I don’t see Connectwise selling anything to Dell. Arnies hatred of them is legendary although I guess if the price is right…

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