Thanks for a wonderful article. I would point your attention to one piece of obvious nonsense contained in the piece:
Dell has little to fear yet, Perron said, as channel-friendly companies struggle to grab mind share from the direct competitor. But the Round Rock company does have one potential problem, Perron said: Dell has drawn a lot of attention to itself and has become the target of channel competitors.
Compaq, for example, consistently matches price with or undercuts Dell on many product lines. Other competitors have stood back while the Texas rivals duke it out, analysts said. In a recent round of workstation introductions, for example, Compaq and Dell locked horns on price while Hewlett-Packard Co. and others refused to match them.
What's wrong with this picture? Obvious to us on the Dell thread! Compaq is struggling to make a profit because it incurs too many layers of profit in the channel. That means that in a price war Compaq will lose. So, for channel members trying to compete on the basis of price is suicidal for them. Which obviously explains why HP did not engage in the fray. Now, if Compaq and its channel members concentrated instead on service, reliability and quality (which is the raison d'etre for intermediate channels) Dell might face stiffer competition.
How can Compaq effecively compete when Compaq was harshly criticized for quality, with IT managers complaining 10 percent of its servers were dead on arrival.
Thanks again for a great article.
TTFN,
CTC |
