May 11, 1998 10:35 AM PDT

Unisys, Wang to serve Dell

Direct vendor Dell Computer announced a far-reaching agreement under which Unisys and Wang will become two of the company's major customer service providers.

As earlier reported, Unisys will become a preferred provider of application development and service and support of Dell's corporate customers, while Wang will take on a similar role. Under the alliance, when customers call Dell for repairs or network help, Unisys or Wang technicians in Dell uniforms will handle the task.

"We're integrating these companies into our business model. Services is going to be the new competitive battlefield for the IT industry," said Dell chairman Michael Dell in announcing the agreement.

Dell has had a relationship with Wang for some time, and a relatively limited relationship with Unisys. Together, the two companies employ 25,000 worldwide. As a direct vendor, Dell has no service staff of its own nor established relationships with the "channel," the international network of computer resellers and integrators who make revenue from selling computer products and services to corporations.

Dell has used other partners in the past, but these two will come to dominate Dell's customer service business, especially in large accounts. In addition, the three will work together on bidding for corporate business, according to Dell chairman Michael Dell.

"The overwhelming majority of our business for global customers will be conducted by these two firms," said Dell.

Dell will chalk up revenues and earnings from the agreement, Dell said, opening up a new income source for the Round Rock, Texas, company. In recent years, profits from services have grown strongly for rival computer vendors such as IBM, but Dell has missed out on the boomlet.

Since January's announcement that Compaq Computer agreed to acquire Digital Equipment, Dell has been seeking out additional partners to perform on-site customer support. Digital's Multivendor Customer Service (MCS) division has been responsible for a substantial portion of Dell's customer service, but reliance on the worldwide force of thousands of computer technicians and software specialists obviously grew risky as soon as it became a future part of Compaq's organization.

At the time, MCS handled about 25 percent of Dell's U.S. customer support and acted as the primary service provider in the Asia-Pacific region, according to a Dell spokesman. But Dell has been phasing out Digital's involvement in its operations and giving business that traditionally went to Digital to other service providers such as Wang.

Dell has also continued to gain market share in PCs and servers, increasing its need for field service and support.

Cementing an alliance with Unisys is a logical, if not inevitable, choice. Unisys employs several thousand technicians, and while the company does not maintain as large a presence in the U.S. market as some providers, it has a strong presence overseas, system integrators have said.

Further, Unisys is one of the few major service providers does not present business conflicts. Many of the large field service operations are owned by competing PC vendors, and an alliance with these parties would indirectly serve to help competitors.

With the pending Digital acquisition, Dell became the only major PC vendor without its own army of field technicians. IBM and Hewlett-Packard have service, support, and integration divisions which account for significant revenues.

Service capabilities can also be found in the channel, but while Dell works with channel members on certain contracts, direct vendors and computer resellers generally mix as well as oil and water. Dell's direct business model has sapped much of the profit out of hardware sales, a sore point with channel members.

Although Dell is primarily known for hardware sales, corporate customers seem to be enamored with the field service performed by its agents. At least two major computer resellers informally polled corporate customers on their reasons for choosing Dell as a vendor. In both polls, service came up as the main reason.

 

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