Dell's Rebooted Asian Strategy

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Chakraborti warned though that it will need to take a gradual approach in implementing its channel strategy to avoid failure, which will hurt the company more than its absence in the reseller market.

"Dell should be cautious in its retail venture and take a step-by-step approach, rather than do everything at the same time," he said. "[Its] competition will leave no stone unturned to make Dell fail in this venture, and Dell should be guarded against this."

Its archrival HP, appears ready to meet the challenge. With Dell's impending move to adopt the indirect sales model, running on a channel strategy may no longer be HP's differentiator.

In spite of this, the current PC market leader seems unfazed.

Dennis Mark, vice president of marketing for SMB and TQS (total quality service), HP Asia-Pacific's personal systems group, said the company feels "vindicated" when its competitors start looking at indirect and retail channels because this demonstrates HP's strategy to offer customers "choice of channel, products and solutions was the right one".

"Partnering is in our DNA," Mark said, adding that HP has over 40,000 channel partners in the Asia-Pacific region and 250,000 channel partners worldwide. This network allows both enterprise customers and consumers to buy HP's products through a channel partner, online or retail shops, he said.

Unperturbed by Dell's pending onslaught, Mark said HP believes its "most complete" channel network will become "an even bigger differentiator" for the company.

He noted that the company is already in 420 cities in China, and will be looking to increase this number to 600 over the next few quarters. HP is also present in 425 cities in India, and is targeting to up the number to 525 in the next few quarters, he added.

Mark further described the company as "streets ahead of competition" in terms of its partner network and customer support.

"We feel great about our current [market] position globally, as well as in the Asia-Pacific region," he added. "Over last year, HP broke away from the competition...on the back of our multi-channel, partner-driven, customer-focused global strategy to deliver products...designed and innovated to deliver a truly personal computing experience to users."

New hybrid sales model

However, Dell is placing its bets on a model that is a blend of both direct and channel sales.

Ferrand stressed that Dell is not abandoning its direct model, which has helped provide the cost advantage it has over the competition. "We're not going direct like everybody else, where they're simply pushing their products on retailers or resellers to sell," he said.

Rather, Dell will continue to preserve and improve its supply chain which, he said, will prove to be a critical competitive differentiator for the company as Dell makes its play in the retail market.

"We're going to leverage our build-to-order capabilities so our resellers won't have to carry inventory, and we can still have a winning strategy without being a HP or Lenovo," Ferrand said.

"Our competitors typically don't have the supply chain that we have, and would [stock] thousands of their [computer] systems on the shelf," he explained, noting that this adds to their inventory cost.

In addition, consumers can only choose from specific configurations available on the retail shelf. "So it's a traditional supply-driven model," Ferrand said.

In contrast, Dell's new retail strategy will be supported by a network of VARs (value added resellers) and retail chains that can leverage the PC maker's already-proven supply chain, he said.

He noted that the company's retail strategy in the Asia-Pacific region will be a mix-and-match of both the direct and indirect sales models, where Dell's go-to-market strategy will likely differ between countries.

Ferrand explained that retailers can choose to have a handful of system configurations on the store shelf for consumers to see and touch. If a customer wants a model that is not available on the shelf, or that may not be in the inventory, the retailer can still place an order configured to the customer's requirements and have the system delivered to his doorstep.