Dell's Direct Sales Approach Wilting

by , 12:10 PM EDT, April 30th, 2007

The Dell direct sales model has been a big success at Dell. Lately, however, the systems is showing signs of weakness brought on by new customer buying patterns, according to the New York Times.

Dell, under pressure from HP and Apple, has found that its traditional direct sales model isn't working as well as it once did. As a result, Michael Dell resumed the management of the company in January and is looking at news ways of selling Dell's computers. "The direct model has been a revolution, but it is not a religion," Mr. Dell told his employees last week.

Analyst Samir Bhavnani has believed that the dynamics of the market have been changing for some time. Consumers shifted from desktop systems to notebooks, and it hasn't been as easy for Dell to configure notebooks on the fly -- which has incurred costs. "In addition, consumers were showing a preference for touching and feeling a notebook PC before buying it," Damon Darlin reported.

As a result, Dell's new management team has been putting into place a new manufacturing and distribution system and trying to create a sense of urgency with the employees. "This is a defining moment in our history and in our relationships with our customers," Mr. Dell wrote.

Apple's combination of a set of retail stores where customers can touch and feel new computer and the on-line store has certainly been a hit with their customers. Even when customers prefer to buy a Dell PC, they're likely to be influenced by the appeal and potential of their local Apple store offerings.

Previously, Dell has experimented in Dallas with a mall presence, but one could still not walk out of the store with a computer -- only order one based on the display models. Time will tell if Dell can succeed with a new retail approach selling commodity PCs as Apple has done with uniquely designed, valued and marketed Macs.