CPQ fighting back !!!
Compaq takes aim at Dell with
server program
By Ian Fried
Staff Writer, CNET News.com
June 12, 2000, 11:45 a.m. PT
Compaq Computer is not mincing words in its latest effort to
stem customer defections in its Intel-based server business.
With the "Dell Win Back" program it began discussing publicly
last week, Compaq is taking direct aim at its chief rival,
organizing a virtual "SWAT" team of a dozen Compaq executives
ready to help its sales force and resellers win back or protect
Fortune 500 accounts.
The market for servers that use a
combination of Intel chips and
Windows software is growing quickly,
but Dell Computer has been grabbing
much of that business, analysts say.
Compaq says it has gained back
customers lost to Dell in the "double
digits" since it launched the Dell Win
Back effort two months ago. Analysts
say that despite Compaq's strong
product offering, however, Dell's
advantages are proving tough to beat.
"Dell can provide the lowest price
points and speed of delivery because
of the direct model," said David
Bailey, an analyst at Gerard Klauer
Mattison.
Dell spokesman Jerele Neeld said his company must be doing
something right to get such attention from Compaq.
"We must be taking quite a lot of business from them if they've
got a specific program for it," Neeld said. Dell said it has no
comparable program specifically aimed at the market leader, but
he said Dell does have a more general plan for winning new
business.
Compaq said it has not added any new staff for the Dell Win Back
program, which targets accounts that would already have an
account manager assigned to them.
"We have the resources," said Compaq spokesman Arch Currid.
"It wasn't a resource issue. It was a focus (issue)."
Currid said Compaq is trying to be more responsive. For example,
if customers have pressing delivery needs, Compaq wants to bring
in logistics specialists to make sure the customer's needs are
met. Currid said the one thing Compaq won't sacrifice to win back
business is profitability.
"We didn't do it with Amazon," he said. "It's not a good business."
Compaq was left in the cold when Amazon last month announced
that it was turning to Hewlett-Packard to supply 90 percent of the
hardware needed to run the e-commerce giant. Compaq and Sun
Microsystems had been providing Amazon's computing muscle.
The trouble for Compaq is that Dell can go after business
profitably at a much lower price, analysts say.
US Bancorp Piper Jaffray analyst Ashok Kumar said Compaq will
be hard-pressed to displace Dell, given that Dell's margins are
about twice that of Compaq's.
"Going forward, the best Compaq can do is probably grow with the
market, as opposed to gaining share at the expense of Dell,"
Kumar said.
Compaq's greatest strength is at the high end of the Intel server
market, said Donaldson Lufkin & Jenrette analyst Kevin
McCarthy.
"Fortunately for Compaq, they're still perceived to be a pretty good
technology company," McCarthy said. "I think they do better on a
relative basis at the high end."
Bailey said he is pleased to see Compaq targeting the
fast-growing Intel server market. He said Compaq's product lineup
is strong, and the company can be competitive if it can improve
its pricing and delivery.
"I think it's far from certain they will be able to do that," he added. |
