Straight down the middle: a formula for success

After concentrating on personal consumers and big corporations, computer companies are going after the middle market. Roger Trapp talks to two direct suppliers about their strategies

Nobody could accuse Dell Computer of lacking confidence. In the 13 years since the founder, Michael Dell, started selling computers from his room at the University of Texas, the company has leapt over rivals to vie for the position as top supplier to US corporations.

It is an achievement that has brought the Austin-based organisation profits of more than $500m last year, and has reputedly made its 32-year-old chief executive the richest man in Texas, with a personal worth of more than $3bn. But the company has not got where it is today by relaxing, and this week it is attempting to establish itself as a major player in the mid- corporates market.

Thanasis Iatrou, managing director of the UK Preferred Accounts Division, as this initiative is termed, stresses that Dell's position as a direct seller should make it well-placed to serve a market with widely divergent needs. Since Dell knows who its ultimate customers are - and speaks to them every time they make an order - it can respond to meet their requirements, without facing the risk of having distributors filtering out comments that they fear the company might not want to hear.

Equally, though, Mr Iatrou acknowledges that the company cannot afford to have staff dealing with the customers if they are not comfortable with the products. "It is very important, if you do business on the phone, that you have experienced people," he says.

To ensure that it is well equipped to serve a market that is increasingly attractive to businesses of all types, Dell has been recruiting such staff from within the company itself, from distributors and from other telesales operations.

In addition, Justine Warburton, recently recruited from Compaq to be UK marketing director of the operation, emphasises that the company has been "putting a lot of effort into understanding the market", as well as preparing to spend millions of dollars on advertising to make sure that its presence in the market is well known. She herself has spent a great deal of time listening in to calls from existing middle-market customers in an attempt to gauge their concerns and particular demands.

But the important thing about the middle market is that it is so wide that it is, in effect, all things to all men. For example, Gateway 2000, another direct supplier of computers that bases itself away from the silicon centres in South Dakota, already claims to have a stronghold in the other end of that market - the small and medium-sized business.

As Michael Maloney, marketing director of the company's Dublin-based European operation, explains, its approach of providing value for money and free lifetime technical support is highly attractive to this sector of the market.

Though the company is not as well established here as in the United States, where it was founded by Ted Waitt 12 years ago, Mr Maloney claims that Dell has made great progress since the European operation opened in 1993, with about a third of its business going to small and medium-sized companies.

Coming from the opposite direction to Dell, Gateway sees this market as a natural outgrowth of its experience of dealing with individual buyers. "You've got to be able to offer them value today that they can build on. They can't afford to throw everything out after a year and start again," says Mr Maloney. Consequently, the company finds the modular approach, whereby buyers add to their system as their requirements and buying power grow, works well.

At the same time, having the same sort of personal contact with customers as is enjoyed by Dell enables Gateway to respond to customer needs - after all, every Gateway computer is built to individual specification.

Moreover, by passing these comments on to Microsoft and other suppliers with which it has developed partnerships, it is able to influence future developments.

And, as Mr Maloney adds, such companies are prepared to listen to these comments because everybody now realises that the small and medium-sized companies of today may well turn out to be the stars of tomorrow.

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