Dell looks beyond direct sales

Dell's direct model 'is not a religion', according to founder Michael Dell

Computer maker Dell is considering giving up the exclusivity of its direct sales model. 

Chief executive Michael Dell said in a leaked internal memo that "the direct model has been a revolution, but is not a religion", according to reports in The Wall Street Journal.

"We will continue to improve our business model, and go beyond it, to give our customers what they need," Dell added.

Limiting sales to the web and phone allows Dell to reduce the overheads associated with retail and channel sales. The model is considered a major contributor to Dell's success, together with a well co-ordinated supply chain.

But the magic appears to have worn off. HP has surpassed Dell as the world's largest PC manufacturer, and Dell earlier this year replaced chief executive Kevin Rollins with the company's original founder Michael Dell.  

Dell rose to fame building cheap systems, but Apple and HP have succeeded in lifting the design of the actual computer to the top of consumer buying priorities.

Physical appeal, however, requires that shoppers are able to see and feel the products rather than select them from a catalogue or website.

This increasing need physically to experience new computers prompted Sam Bhavnani, a research director at Current Analysis, to recommend that Dell add a retail channel.  

Critics have also pointed out that Dell's direct strategy is ill-suited for emerging markets such as China, where consumers are not used to ordering major consumer goods online or over the phone.

The leaked Dell memo recommended that the company increase its sales push in emerging markets, claiming that these are poorly served by existing vendors.