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Dell negotiations: Street ball without the refs

Negotiating hardware deals with Dell isn't for everybody. In fact dealing with Dell can be downright difficult relative to other hardware vendors.
Written by Larry Dignan, Contributor on
Negotiating hardware deals with Dell isn't for everybody. In fact dealing with Dell can be downright difficult relative to other hardware vendors.
That takeaway came from Gartner analyst Leslie Fiering's presentation at the Gartner Symposium ITxpo. In that presentation, Fiering noted that Dell's pricing isn’t transparent if you're an IT buyer.
Why? If you go to the Web site you'll find prices that change frequently. For enterprises, this approach can be tricky. They want so-called list prices. IDC tracks Dell and publishes these prices.
Fiering also said you have to watch Dell closely. It may give you cheaper prices and then inflate fees for things like shipping and handling.
The point warranted some followup as I was wondering why Dell played hard ball and whether there was a long term impact to the company. Fiering said that Dell's approach wasn't bad and it certainly wasn't unethical, but when you negotiate with the company expect a battle relative to HP, IBM and Lenovo.
"Going against HP and IBM is like playing basketball in an air conditioned gym with hot showers," explained Fiering. "With Dell you're playing street basketball with no referee."
Her comments prompted one buyer in the audience to ask whether anyone could get a good three-year deal from Dell. Her answer was a definitive yes with a few caveats.
For starters, Dell has its own rules. Sometimes Dell's rules fit with your buying strategy and sometimes they don't. Fiering notes that Dell allows as few exceptions are possible--that's how it makes money. IBM, HP and Lenovo use a sales model that Fiering describes as a "cocoon," which says to the customer "don't worry we'll take care of you."
In other words, most hardware vendors will bend to make a sale. Dell doesn't bend. That's what has maintained Dell's profit margins and kept costs down. For instance, Fiering notes that one large customer needed 30,000 PCs in three days. Dell could not get it because it delivers in five to 7 days. If you had a 14 day window Dell would have been fine. Another point: You have to be proactive with Dell to get better pricing over a term of a deal.
"You have to see if you fit in with Dell's model. If you do you'll have a fine relationship. If not the negotiation will be hard," said Fiering.
Fiering didn't seem to think that Dell's negotiating approach is necessarily a handicap. In fact, she shot down my question asking if Dell faces a tough time as larger rivals bend on hardware to sell services and software. However, I don't think the question is that easily dismissed. In a down market with competitive prices do technology buyers really want a tough negotiation too?
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