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Leaked memo exposes Dell's plans

Tom Espiner ZDNet.co.uk

Published: 01 May 2007 14:53 BST

Dell is to consider selling PCs through a reseller channel, breaking the direct sales model which has seen it become one of the world's top two computer vendors.

Details were leaked in an internal staff memo, which also contained details of an organisational restructure at Dell.

Dell's success has been built on direct sales, which eliminated the costs associated with channel sales. However, with a changing global sales climate and an explosion in PC retail growth, especially in developing markets, Dell is reconsidering an indirect strategy.

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The leaked memo, which was jointly authored by Michael Dell, the company's chief executive, and his executive team, read: "The direct model has been a revolution, but is not a religion... Dell plans to make information technology affordable for millions of customers around the world. We will do this by simplifying IT where others perpetuate complexity, and innovating beyond hardware into solutions."

The company also said it is planning a round of job cuts. Having refined its executive team, the company now plans to make further reductions to its workforce. "We need to streamline our management structure to speed decisions and remove bureaucracy," said the memo. "We plan to eliminate overlaps in our organisation and activities... We also need to improve sales productivity. These won't be merely exercises in cost-cutting."

All has not gone perfectly for Dell over the last year. The company lost market share in 2006, according to statistics produced by Gartner, falling into second place behind HP.

Dell's accounting procedures are also currently under investigation by the US Securities and Exchange Commission. The company has failed to file recent earnings reports with regulators due to the investigation.

The memo is reproduced in full on the next page...