'Unimaginative' Dell lauds direct sales

In a thinly-veiled attack on its competitors that sell through the channel, Dell has said that it is more agile and fleet of foot because it sells direct.

Speaking at the Gartner Symposium/ITxpo in Cannes last week, Michael Dell, chief executive and chairman of Dell Computers, said that his company knew in real time what customers were buying, how much and when.

"That allows us to know what's going on and to adjust," he explained. "Because we sell directly to customers we know what demand is.

"There are a number of businesses where sales are not really sales; they are sales into the channel. Ours is real demand."

But analysts have suggested that Dell has struggled to overcome the strength of the channel in Europe, and still trails Hewlett Packard's (HP's) PC sales by a significant margin.

Brian Gammage, principal analyst at Gartner Research, said: "The channel in Europe has quite a foothold. HP's lead in the PC market is 10 per cent, unlike in the US."

Dell's costs are lower than many of its rivals, which is a challenge they must overcome, but Gammage did not feel that it had taken advantage of the HP/Compaq merger.

"It doesn't have enough imagination to take full advantage of the opportunity in front of it," said the analyst. "It has had a year to exploit HP/Compaq and has done nothing."

Asked why he thought that competitors relied on the channel, Dell refused to answer, saying: "You should ask them that."

When pushed on whether the indirect model gives rivals an advantage, Dell retorted: "Our results speak for themselves."

Dell believes that the PC sector will experience moderate growth in the coming quarter. His company will outgrow the market, he said, but there would not be "tremendous" growth across the board.

Outlining the company's third-quarter figures he explained that, at 22 per cent revenue growth, Dell is outperforming its competitors. Operating income is up 36 per cent.