Thsi is an interesting quote from a CPQ exec. At least they admit their model is weak. Their version of going DIRECT will never match DELL's version. It's a lost race for CPQ.
Fez
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Compaq's 'indirect' sales method
HOUSTON, Texas (CBS.MW) -- Compaq Computer (CPQ: news, msgs) revealed for the first time Friday some of the steep costs associated with its traditional "indirect" method of selling products. Rival Dell Computer (DELL: news, msgs) has won accolades for its direct-to-consumer distribution method, which cuts out the so-called "channel," or third-party resellers. Mike Winkler, a Compaq senior vice president in charge of commercial personal computing, said Friday that the indirect distribution method costs from 13.5 percent to 15.5 percent of product revenue, compared with 2 percent for the more efficient direct method. He made the comment during a meeting with financial analysts at Compaq's corporate headquarters here. "This is fundamentally what the industry is dealing with," Winkler said. "Anyone who sells directly makes money, anyone who sells indirect loses money." Compaq has been struggling to increase its percentage of products sold directly. Earlier this month, the company boosted its ability to ship built-to-order products quickly and directly to customers by agreeing to pay $370 million for the custom-PC operations of Inacom (ICO: news, msgs), an Omaha, Neb., computer-assembly company. Wall Street Journal |
