Dell Moves To Staples: Dude, You're Gettin' An Easy Button

by Sarah Mahoney, Oct 23, 2007, 5:00 AM

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For a company that built its reputation on avoiding retailers, Dell Inc. is certainly getting around. The Round Rock, Texas, company says it has partnered with Staples to begin selling a wide assortment of its products, beginning Nov. 11.

"Dell has hit the ceiling with its traditional direct-selling channels," says Richard Shim, an analyst with IDC, based in San Mateo, Calif. "And one of the big trends in the industry is to gain distribution through whatever channels you can. And for Dell to now be available through Staples, as well as its web site, is a positive thing."

Earlier this year, Dell began selling PCs through Wal-Mart in the U.S., Canada, Brazil and Mexico, and Wal-Mart execs have said the computers have been brisk sellers. Dell has also recently announced relationships with Gome stores in China, Bic Camera Inc. in Japan, Carphone Warehouse in the U.K., and says its new relationship with Staples means Dells will be sold in more than 10,000 retail stores.

"Dell's share has been shrinking slightly and is now on par or just below the industry average," Shim says. "And while some have questioned whether Dell's business model was broken, the issue is that right now, emphasis is on the consumer retail market, particularly on the notebook side. So Dell has been left out of that hot spot, and this will help them find a way in."

The consumer notebook market is currently dominated by Acer, Apple, Hewlett Packard, Sony, and Toshiba.

Another potential advantage, Shim says, is that the Staples deal will likely lead to other big retailing partnerships: "One you've been established as a retail brand, other conversations can get started."

Dell describes the move as "part of its ongoing efforts to extend the advantages of its direct business model." Initially, Staples will sell Dell's Inspiron 1721 and 1521 notebooks, Inspiron 530 desktops, as well as some printers, monitors, ink and toner.

Staples' marketing plans call for including Dell in its upcoming holiday campaign, Sunday circulars advertising, and in-store promotions, according to a Staples spokesperson. And Dell will be plugging Staples in its FSIs, she says. Staples will also likely include a Dell notebook in its list of hot holiday gift items, scheduled for release in mid-November.

Dell and Staples are also joining together on Staples EcoEasy initiative, which allows consumers to recycle office technology products. While the fee is normally $10 per item, those purchasing a Dell will be able to recycle any item for free during the week of Nov. 11 through 17. (America Recycles Day is Nov. 15.)

While Dell's shipments gained 3.8% in the third quarter of this year, according to IDC, its share of the worldwide PC market (which includes notebooks) slipped to 15.2%. In the U.S., shipments fell 4.8%, reducing its share to 28%. Its next closest competitor, Hewlett Packard, gained 16.9% in the same period, for a total share of 24.3% of the U.S. market.

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