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Technology Stocks : Compaq

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To: Night Writer who wrote (33206)9/21/1998 10:01:00 PM
From: Elwood P. Dowd  Read Replies (1) of 97611
 
COMPUTER RESELLER NEWS SAYS......
September 21, 1998, Issue: 808
Section: News

Are Vendors' Gains Start Of Trend?
Keith Burbank

New York -- Compaq Computer Corp.'s servers were cited by resellers as their
best-selling system in the small and midsize company market, surpassing even white-box
units for the second month in a row.

In August, 22 percent of the 136 resellers surveyed said Compaq was their best-selling
server, compared with 21 percent for white-box units, according to data from the
CRN/Answers Research Inc. hardware poll.

The gap between Compaq and white-box servers however, has narrowed since July,
when 30 percent of resellers cited servers made by the Houston-based vendor as their
best-selling units, compared with 25 percent citing white-box servers.

"Compaq servers are the best in class and are significantly outselling any and all
white-box products, as well as [units made by] other major manufacturers," said Tod
Shedlosky, president of MicroEnterprises, a Camp Hill, Pa.-based Internet development
and hosting VAR.

Over the past few months, the percentage of resellers citing white-box units as their best
sellers has been declining, while name-brand manufacturers such as Compaq and
Hewlett-Packard Co., Palo Alto, Calif., have been gaining ground, survey results show.

For example, 16 percent of resellers cited HP servers as their best sellers in August, up
from 14 percent in July and 12 percent in May. Dell Computer Corp., Round Rock, Texas,
also posted a strong gain in August and was cited by 11 percent of resellers.

It remains to be seen if the vendors' gains will persist for more than a couple of months,
but the July and August figures for white-box servers were among the lowest recorded
by CRN in the past two and a half years.

Survey data also shows component availability, while still very good, is continuing to
deteriorate.

Forty-two percent of resellers building their own systems said they had no problems
with microprocessor availability in August. This was down from 51 percent in July and
59 percent in June, and was the lowest monthly percentage since January.

In contrast, 29 percent of these resellers said there were moderate to severe problems
with microprocessor availability last month, the highest percentage since February.

Similar results were seen in other categories CRN surveys such as hard drives, memory
and motherboards. For example, 57 percent of BYO resellers reported no supply
problems with motherboards last month. This was down from the peak reading of 65
percent in May.

As a result, smaller BYO resellers are turning more to the gray market to meet their
needs, although chip brokers often charge a premium (CRN, Sept. 14).

For desktops, the number of resellers citing Compaq units as their best-seller has been
rising, despite much attention being given to Apple Computer Inc.'s iMac system.
Eighteen percent of resellers cited Compaq as the vendor of their best-selling desktop
last month, up from 15 percent in July.

The August figure is the highest for Compaq since CRN began surveying desktops in
late 1994. In contrast, only 2 percent of resellers listed Apple as the manufacturer of their
best-selling desktop.

General Motors Corp. is buying Compaq PCs, Michael Sanford, co-owner of Sanford
Computers, Clarkston, Mich, pointed out. "The work market is flooded with them," he
said. "It's a big corporate deal."

Some of Compaq's increase in desktops has come at the expense of white-box systems.
Even so, nearly twice the percentage of resellers cite white-box desktops as their
best-selling units compared with Compaq. Resellers are seeing a pickup in desktop sales
growth in the near term in the small and midsize market. Fifty-seven percent said they
expect sales to grow 6 percent or more in the September to November period, up from 45
percent of resellers in July and 37 percent in June.

Finally, Internet use continues to surge among smaller resellers. Fifty-two percent of
resellers are using the Internet for business between 11 hours and 30 hours per week.

JOHN ROBERTS contributed to this story.

Copyright r 1998 CMP Media Inc.

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