Compaq Message Board - Msg: 13256947

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Technology Stocks : Compaq

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To: JDN who wrote (79806)	3/22/2000 11:27:00 AM
From: rudedog	Read Replies (2) of 97611

JDN - re: my clear impression was CPQ is attempting to BUY market share You need to re-read the article. $600M of the money goes into Compaq Capital, not to the customers - it is then used to provision ASPs in what is not much different than a standard lease, just with different terms, and finer granularity. The customer does not get a free ride - it just allows smaller customers to get into the game with an easy expansion path, at a lower initial capital cost. CPQ's risk is that the customers will opt out early - not much of a risk when the components are generic and the hardware is housed in a separate facility. CPQ just sells the "power" to a new customer. Lease plans almost always stimulate additional demand, if they are well tailored to the customer needs. The rest of the money was earmarked for investments - probably in the ASP hosts who would actually provide this service, although that was not spelled out. IDC just announced that CPQ actually gained market share in servers - now up to 37%. IBM and HP lost share, DELL held steady but did not gain. So whatever CPQ is doing, it's working.

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