Leaked memo exposes Dell's plans

Summary:Michael Dell may invest in an indirect sales operation, while redundancies are likely to be on the way, according to an internal company document

Dell is to consider selling PCs through a reseller channel, breaking the direct sales model which has seen it become one of the world's top two computer vendors.

Details were leaked in an internal staff memo, which also contained details of an organisational restructure at Dell.

Dell's success has been built on direct sales, which eliminated the costs associated with channel sales. However, with a changing global sales climate and an explosion in PC retail growth, especially in developing markets, Dell is reconsidering an indirect strategy.

The leaked memo, which was jointly authored by Michael Dell, the company's chief executive, and his executive team, read: "The direct model has been a revolution, but is not a religion... Dell plans to make information technology affordable for millions of customers around the world. We will do this by simplifying IT where others perpetuate complexity, and innovating beyond hardware into solutions."

The company also said it is planning a round of job cuts. Having refined its executive team, the company now plans to make further reductions to its workforce. "We need to streamline our management structure to speed decisions and remove bureaucracy," said the memo. "We plan to eliminate overlaps in our organisation and activities... We also need to improve sales productivity. These won't be merely exercises in cost-cutting."

All has not gone perfectly for Dell over the last year. The company lost market share in 2006, according to statistics produced by Gartner, falling into second place behind HP.

Dell's accounting procedures are also currently under investigation by the US Securities and Exchange Commission. The company has failed to file recent earnings reports with regulators due to the investigation.

The memo is reproduced in full on the next page...

Topics: Hardware

About

Tom is a technology reporter for ZDNet.com, writing about all manner of security and open-source issues.Tom had various jobs after leaving university, including working for a company that hired out computers as props for films and television, and a role turning the entire back catalogue of a publisher into e-books.Tom eventually found tha... Full Bio

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