What Is The Sound Of A Race To The Bottom? -- A Channel Perspective

As we shuttered Channel Maven Central in preparation for our annual Memorial Day geocaching drop-off trip (we send the interns out to recover the cache on a team-building exercise in late summer--it's very Darwinian, just like life in the channel, and most of the interns actually return), we noted with some interest that Wal-Mart had agreed to put two Dell SKUs in its emporia quite soon.  We would have slowed down and discussed this latest chill in the nether world, but we had rivers to cross, mountains to ascend, etc., etc., and somebody had forgotten to order enough ice, so we had to get an early start on all the Yuengling left over from the Halloween party, but that's another story, and the police records seem to have been destroyed in an administrative oversight anyway.  Nonetheless, this development kept us talking and speculating over the weekend.  Some of us remembered that Dell had tried to sell at retail in the early '90s, and that hadn't worked out very well, while others of us remembered that Wal-Mart had fitfully tried to sell PCs and other electronica over the years, and that hadn't worked out very well, either, except at the very low end.  ($59 DVD players, anybody?)  One of our party put it nicely when he observed, "If you didn't want to build a channel, that's the way to do it."  A little Zen, but we'd probably have agreed if we hadn't been concentrating on raking our stones. 

So on our way down the mountain, we threw caution to the winds, and actually conducted a field trip to our local Wal-Mart, to see what sort of welcome awaits the Dell machines.  What we saw surprised us.  We learned we've been paying way too much for our geek whistles at Ned's Nerd City, but aside from that, we were unimpressed with the rather...incoherent PC display, hidden as it was off behind all the child-proof CDs.  We noted six slots for Acer PCs, with four units on hand, along with about a dozen Toshiba laptops under lock and key.  The PCs were set off by an odd assortment of generally useful peripherals, but it would be hard to understand what would compel an end user to buy a PC in that environment.  Apparently, Wal-Mart management is similarly challenged--in a report to Wal-Mart management highlighted by the NY Times, it turns out Wal-Mart is "not seen as a smart choice" for purchases of groceries, clothing, home decor, and oh, yes, electronics. 

Wal-Mart is obviously a consumer play for Dell, and Dell needs to get well in the consumer market if it wants to grow faster than it has recently.  We don't disagree that Wal-Mart should be a part of Dell's channel strategy, but the relationship will set a tone and expectations elsewhere in the channel; we would have started somewhere else. 

Oh, and as for Ned's Nerd City, we think there's enough entertainment value to be had just listening to the arcane misdirection that passes for advice at the repair counter that we'll keep buying our geek whistles there.  That's the beauty of multiple sources.

 

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