Dell Computer may find itself reaching for too much of a good thing--at least in the eyes of some of its partners.
Its tighter focus on corporate services has brought prominent contracts and growing revenue to both the PC maker and its partners that help provide the services. But executives and analysts say conflicts with those allies could be looming.
Consulting companies are expected to get a boost by teaming with Dell, the Texas-based company whose sales and corporate contacts have continued to grow despite an industrywide slump. However, these partners are also wary of finding themselves squeezed as the computer giant expands its services business.
On many contracts, Dell's portion of the services work results in the company hauling down about 30 percent of the revenue in that area, with the rest going to its partners. But by increasing the proportion of services it handles, Dell hopes to expand its take to 50 percent to 70 percent.
"It's not clear if the end point will be 70 or 50 percent. We'll figure this out with our customers along the way," said Jeff Lynn, general manager of Dell's Professional Services group, who nevertheless characterized the situation as a win-win deal. "Although on a percentage basis we'll be delivering more of the services and our partners less, on a dollar basis it will grow for everyone" because of the expected growth in contracts and in the overall revenue pie, Lynn said.
News source: Cnet
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