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Technology Stocks : Compaq
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To: otter who wrote (17650)2/20/1998 1:30:00 AM
From: Obewon   of 97611
 
Ray,

The main answer to your question is that the two companies don't overlap very much. Get rid of DEC's consumer PC business (about 3-5% of its sales) and all the remaining overlap is in the mid range enterprise market.

The consumer market will continue to be "serviced" through reseller channels while the mid-to upper enterprise markets will be direct sales. Even Dell doesn't catch its enterprise customers through the phone or Internet. For the big sales, a company has to pitch its wares in person. With the increasing complexity of computer systems and the increasing shortage of talented people able to maintain corporate networks, bundling service is a must to capture these accounts.

Now I believe that someone posted that approximately 20% of Dell's large accounts are serviced by DEC currently. This was possible since Dell and DEC's markets overlap even less than CPQ's and DEC's. Now Dell is in a pickle since it must find a new servicer of its accounts (or must start its own servicing business) to stay competitive. (Unisys might be a good candidate at this point.)

Comparing CPQ to IBM is difficult currently because they haven't been at each others throats like Dell and CPQ. (I laugh at IBM's feeble efforts in the comsumer market: I have much more respect for their corporate sales arm.) Recently IBM has shown signs that it realizes that it must try to compete and is slowly bringing itself back from the brink. It remains to be seen whether it can change rapidly enough to keep up.

OB
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