Dell’s direct OSS sales model

Dell sells directly to its customers, avoiding the markups of intermediaries. Dell once diverged from this model, selling through agents, but failed and quickly reverted.

The OSS market is quite clearly different from Dell’s PC and laptop market, with vastly different customer volumes and revenue per customer.

However, there are some OSS companies that have made the direct and online sales model work very well for them. Take for example the recent sale of Solarwinds and the profitability it has achieved with the direct online sales model.

Solarwinds and its ilk can support self-service, building tools that must be easy to commission and use to be successful.

Traditional OSS take a lot more expert services effort to become operationally useful. Since their products are so specialised, they are also invariably the only ones who know how to set their products up. Sure there are integrators, but they tend to follow the Pareto principle of product knowledge (ie the 20% that gives 80% outcome).

This leaves most vendors with a direct, albeit not online, sales model that introduces a dilemma. To deliver to customer expectations, they need to have product and services capabilities. However, each of these requires a different corporate mindset and almost every organisation I’ve worked with tends to work better in one of these rhythms or the other.

I can’t help but think that an organisation with a direct and online sales model will significantly disrupt the OSS industry, not so much because of the sales model itself (although it will help by reducing cost of sales), but because of the 360 degree efficiency mindset that will be required to delight customers.

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