Dell eyes more indirect income in South Asia

Hardware maker will boost enterprise partnerships as it seeks more revenue from indirect channel, which now accounts for 37 percent of its revenue.
Written by Vivian Yeo, Contributor

SINGAPORE--Dell is growing its partner program as it seeks a greater share of revenues from the indirect channel, according to company executives in the region.

Citing 2009 first-quarter data from market analyst IDC, Dell's general manager for South Asia Ng Tian Beng noted there were 11.8 million units of PCs and servers sold in the South Asia region last year. Indirect sales accounted for around 93 percent of the unit volume.

Hardware sales, he said in a media briefing last week, are projected by IDC to nearly double to 21.8 million units by 2013. This presented opportunities for Dell, which currently holds a 9 percent market share.

For Dell, South Asia comprises the Southeast Asian region, Bangladesh, Pakistan and Sri Lanka.

From virtually zero a little over a year ago, revenue from partners currently make up 37 percent of Dell's total earnings, reported Ng. That proportion "will definitely go up", he said.

"The objective is to grow it faster than the overall business," Ng added, but declined to provide further details.

At the heart of Dell's channel partnerships strategy is its PartnerDirect program. In South Asia, there are 500 registered or basic-level partners, 82 certified partners with a higher level of commitment toward Dell and 14 specialized enterprise partners with the ability to provide expertise in servers and storage. Globally, Dell has over 50,000 partners.

"A big percentage [of customers in the region] are very comfortable working with partners," said Ng. "For us, this program becomes even more important to run our business."

According to Ng, channel partners play an important role in reaching out to the small and midsize business (SMB) market. The SMB segment, he noted, is the second largest market in South Asia after consumer.

Catherine Lian, Dell's regional channels director for South Asia, added that SMBs typically look for specialized services on top of having hardware requirements. To that end, Dell would focus on working with system integrators to provide enterprise applications and services such as in the area of storage, she said.

Direct sales for PC vendors to decline
Research analyst Gartner said in a report last month, that indirect sales will account for 80 percent of all worldwide PC shipments by 2012.

In an e-mail interview with ZDNet Asia, Gartner's principal research analyst for client computing Lilian Tay added that the indirect channel in 2008 already accounted for 79.7 percent of PC shipments in the Asia-Pacific region. Taiwan, at 96 percent, recorded the highest share of PC shipments through the indirect channel.

"PC vendors such as Dell that typically sell direct to enterprise accounts, will see demand from this segment decline in the short term due to the economic crisis, with some recovery expected in 2012," she noted. "Therefore the shift to indirect should also help vendors such as Dell to realize greater cost-efficiencies by leveraging third-party channel as they expand into emerging markets and satisfy the increased demand from consumers."

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