Paul, I do indeed agree, and I find find it shocking that CPQ is partial to a strategy that produces such obvious inefficiencies, to wit:
1. Because of CPQ's consignment policy, retailers have an incentive to carry excessive levels of inventory.
2. There is the further waste of goods not reaching the public until after they have become obsolete. Anyone who picks up a copy of PCCompleat, CDW, etc. mail order catalogues can observe brand new, 6 mo. old CPQ computers which are still for sale!
3. Of course, there is also a certain amount of extra shipping costs and red tape necessitated by moving these inventories around from one vendor to another.
Now, what does CPQ gain as a result? RPM worked in the past, IMO, because of the brand appeal associated with the CPQ name. Many consumers were willing to pay a premium to own a CPQ. But will they continue to pay that premium now that they can own an equally good alternative, an HP? Or even an IBM, which is becoming more competitive in low priced end of the market.
My guess is that the RPM approach is becoming less and less profitable as the low-price market becomes more competitive. If that's true, CPQ may find that it must alter it's strategy in order to remain profitable.
Regards,
Geoff |
