Hi Y'all,,
Thought you would be interested in this. I have been doing a little John K. action but maybe waited a bit too long to get back in this time (which would be a great thing for Compaq shareholders!).
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Compaq to SPs: Let's Fight Dell
Targets Direct Vendor After Losing Market Share Spot
By Edward F. Moltzen, CRN
New York
5:50 PM EST Fri., Apr. 27, 2001
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Compaq-Proxicom Deal: Solution Providers To 'Wait And See'
On the heels of loosing its number 1 PC market share ranking to rival Dell, Compaq has stepped up efforts to make its prices more competitive for solution providers.
Several solution providers say Compaq has intensified activities over the past two weeks with the specific goal of taking sales out of Dell's pocket.
"We've probably had more contact with our Compaq rep in the last few weeks," said Jim Dent, service technical consultant for Technology America, Hoover, Ala. "They have indicated their intention to compete head-to-head with Dell and others."
Both solution providers and Houston-based Compaq executives say the efforts are not an across-the-board attempt to beat Dell at any cost, but are targeting their Round Rock, Texas neighbor in a new, organized effort on a case-by-case basis.
"I just got an email from my (Compaq) reseller rep to ask if we've had any wins against Dell," said one mid-Atlantic solution provider who asked not to be named. "We've been able to get special pricing from Compaq for special accounts that might have (gone to) Dell."
On April 23, Compaq reported earnings of 12 cents per share that came in a shade below Wall Street's consensus expectation. Compaq CEO Michael Capellas told financial analysts later - as he has said on several occasions since last year - that Compaq is more focused on offering end-to-end solutions rather than picking up pure market share gains at a cost to profitability.
Still, he said, Compaq would embark on new competitiveness in pricing - as well as efforts to reduce its inventories and channel inventories - in the coming months.
Al Clasing, director of sales for Compaq solution provider Manchester Technologies, Baltimore, cautions that price wars with Dell would ultimately be an incorrect strategy.
"If you are (going) against a competitor, but primarily Dell, there is the ability to get a few extra discount points," Clasing says. "In general, I don't think pricing at this point is really the issue."
Instead, says Clasing, other, multiple efforts - including more efficient inventories - would be needed. "Right now, Dell has a better marketing organization," he says.
Mike Stumpo, vice president of Network Resources, a Chantilly, Va.-based Compaq solution provider, says that the vendor has taken some non-pricing steps to boost channel sales.
"Compaq just recently introduced, or re-introduced, a couple of programs aimed at making the reseller a little happier," Stumpo says. "They had taken some things away and they're brining them back - like the way they deal with training and things they provide on the backend for partners."
Compaq executives say they have told top solution provider partners they will beef up efforts in several areas, including training, to encourage heightened sales.
Dan Vertrees, Compaq's vice president of North American channel sales, echoed Capellas' caution that the company would not sacrifice profitability for PC market share.
"PCs really aren't driving technology today," he says, noting Compaq's strategy of building solutions that range from handhelds to large data servers. "It's enterprises. [Corporations] don't rely on PCs running their organizations overall. They access infrastructure, databases."
However, he concedes that once inventory levels are reduced, the company is poised to take "aggressive" pricing steps. |
