I'd like to speculate on Compaq's future by looking at a the present. In today's Boston Sunday Globe inserts from four computer sellers(Compusa, staples, computer city, and officemax) feature a compaq on the front cover. This is a strong indication of Compaq's stronghold in the dreaded channel. It doesn't surprise me that they are loathe to give this up, I imagine it has been and continues to be very profitable for them. They can't go BTO without seriously upsetting this cash cow.
Going forward I have faith that Compaq will indeed increase their profitability albeit more slowly than the others because they have so much at stake. A more competitive pricing environment means short term pain for Comapq but inflicts more of a toll on the second tier box makers. I think we're in the midst of a very painful shakeout, the survivors will gain market share at the expense of margin. The survivors will be the low cost providers, Compaq's size and buying power guarantees this.
The key is to get pc ownership near or at 50% penetration in the United States, and grow their market share in Europe, Asia and the developing world where markets aren't so mature. My concern remains that Compaq's image is not as technologically advanced as Dell, savvy users like the idea of Dell configuring a box to their specifications, Compaq needs to address this issue or will continue to surrender customers and the richer margins on high powered machines to Dell and Gateway.
Just my opinion.
J. Gregerson |
