Sig -
Some very good points. I have a few minor quibbles with a few items -
I assume that in by canning 12,000 Tandem people you were talking about DEC people. BTW CPQ has never confirmed the layoff numbers but we all know there will be a lot of layoffs. I have heard that there will be a little higher percentage of DEC people laid off than Tandem or CPQ people but that there is a big effort underway to identify the productive capable people across the combined companies, regardless of what business unit they happen to be in now, and keep them. There is also 'no immunity' - I have heard that some senior CPQ people (even some on EP's staff) may be leaving to 'pursue other interests' soon.
they could dive head first into the most competitive field of low cost consumer computers, to get their own retailers/stores teed-off by also dealing direct
Sig, CPQ didn't dive into consumer PCs this year. They pretty much invented the category of specially designed consumer machines in 1994. This has been and continues to be a hugely successful business for CPQ. Also a good example of 'business practice that can be real good for the USA and American workers' since CPQ was able to develop assembly and production planning methods for Presario that allowed the Houston MFG facilities to produce systems at a lower cost than any of the Asian facilities, CPQ or otherwise. I think that is an interesting American success story and shows that low cost labor is not always the best route to low cost product. Those folks in Round Rock have also demonstrated that fact.
As far as the conflict between CPQ direct sales and retailers, this is also not a new story in the consumer business. As has been pointed out several places on this thread, CPQ does not discount their direct sales below the retail channel. Also, and more importantly, CPQ has no incentive to undercut the retail stores since the Presario products are selling ahead of production. Finally, most studies show that the consumer buyers prefer going to a store and walking home with the product, so the direct sales model has not been very successful. CPQ just wanted to pick up any consumer buyers who wanted to buy direct. I don't think there has been much conflict with the retail channel.
Now if you had talked about conflict with the commercial channel I would have agreed, the Ingram Micros and Vanstars of the world will probably have problems adjusting to a CPQ direct sell, just as they have had heartburn over the loss of price protection, end of quarter discount incentives, return privileges, and the potential loss of service revenue. These are the hard to solve problems for CPQ. |
