Thursday October 1, 6:36 pm Eastern Time
INTERVIEW-Compaq aims to boost
German position
By Neal Boudette
MUNICH, Germany, Oct 1 (Reuters) - Compaq Computer Corp (NYSE:CPQ - news) said on Thursday it
expected a new manufacturing strategy to boost its share in the German personal computer (PC)
market, one of the few places where the world's largest PC maker is an also-ran.
Since the beginning of this month, Compaq has turned over production of home PCs in Germany to a
small Dresden manufacturer in an effort to bring its PC prices down to the low levels required by finicky
German buyers, Andreas Barth, head of Compaq Europe, told Reuters in an interview.
Compaq, which only has two percent of the German consumer PC market, is betting the partnership
with Schaefer IT Logistics GmbH will boost its position to near 10 percent.
''We have an average share of 10 percent in the consumer markets in other countries (in Europe),''
Barth said. ''There is no reason we should have less anywhere else.''
Barth declined to say when Compaq expected to reach its goal.
But Toon Bouten, vice president of consumer products in Europe, said Compaq, now the tenth largest
supplier in the German home PC market, should become one of the top five within months.
''We think that's doable by the first quarter of 1999,'' he said.
Moreover, while many PC makers struggle to eke out profit in the consumer segment, Bouten said
Compaq Europe was solidly in the black.
''We have a triple-digit return on capital, so we are profitable,'' he said.
Under the partnership, Compaq has Schaefer build several thousand PCs to precise specifications
chosen by German retailers. After three or four weeks, the retailers can order more and alter the
configurations, Bouten said.
This keeps inventory and logistics costs down and allows Compaq to use the cheapest chips and
components available.
Compaq had to move to this approach because of the peculiarities of the German market, Bouten said.
In other countries in Europe, the company offers home PCs in several relatively standard configurations,
including modems, speakers, software programmes and extra service.
German consumers, in contrast, ''want the fastest processor, a lot of memory and a big hard drive, but
they don't want to pay an extra mark for a modem or anything else,'' Bouten said.
''If you include a modem or speakers, they go to another brand that is cheaper because it doesn't have
them.''
Under these conditions, about 80 percent of the market has gone to so-called assemblers -- local
companies that build limited batches of PCs and sell through discount chains.
''We are trying to get to the same price as the assemblers,'' Bouten said. ''We couldn't compete on
price before.''
Now, Compaq offers a home PC in Germany with a 350MHz Pentium II processor for 1,799 marks. |
