Direct vendors outsell channel

Direct vendors sold more PCs in the US than the traditional channel during the third quarter of 1999, according to a study by researcher IDC.

Direct vendors sold more PCs in the US than the traditional channel during the third quarter of 1999, according to a study by researcher IDC.

For the first time, direct vendors outsold VARs in the PC market, accounting for 31.5 per cent share of PCs sold during the third quarter, compared with the channel's 30 per cent.

The study also took into account sales via the Internet, but only five per cent of PCs in the US were sold online. The retail sector accounted for 33 per cent.

Joseph Rigoli, an emerging consumer and PC channels research programme analyst at IDC, said: "While these results are good news for the traditionally direct vendors, they are bad news for manufacturers sticking to indirect-only distribution strategies."

The figures did not surprise Philip Doye, managing director of VAR Kelway Computer Supplies. Doye said the channel had accepted that the Internet is "changing everything" and that vendors will use it as a method of selling direct.

"Vendors such as Compaq have to operate direct to compete with rivals like Dell. Going online proves they are competitive but the channel will have to become involved at the fulfilment stage," said Doye.

Clive Longbottom, analyst at Strategy Partners International, claimed a hybrid model might be the solution. "To the PC vendors, the direct channel will become more important. They will need a direct presence to show that they are responsive to customers," he said.

The IDC study also found that during the first nine months of 1999, the traditional channel led with 31.8 per cent share of all PCs sold, but the direct channel was not far behind with 31.5 per cent.

Summarising the results, Rigoli said: "To be successful, the PC manufacturers will need to use a combination of direct and indirect selling models.

They will have to balance the resellers' personal touch in the user segment with the logistical efficiency of direct selling and customisation. But above all, PC vendors need to give customers a choice."

- Dell has admitted it has been suffering problems with the level of customer service it provides in the UK and Ireland. Following complaints of long lead times and lost orders, Martin Lambert, marketing director at Dell, owned up to problems with certain processes and procedures, but said the manufacturer was working hard to solve the difficulties.