CHOICE WORDS --
Steven:
Here are some of the comments by VARs about CPQ.
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CHOICE WORDS -- COMPAQ'S CUSTOMER CHOICE MODEL DRAWS MIXED REACTIONS
Dec. 11, 1998 (Computer Reseller News - CMP via COMTEX) -- Houston -- Compaq Computer Corp.'s new customer choice business model, which offers small and midsize companies the choice of buying certain products direct or indirect, has ignited a firestorm of opinion from VARs.
The Houston-based vendor is targeting white-box and direct vendors, notably Dell Computer Corp., with its new Prosignia line of desktops, notebooks and servers. Compaq is selling the systems both through VARs and direct through DirectPlus, and pricing them to better compete with direct vendors.
"The best model is customer choice. And we are confident that it is the winning model-for Compaq and its customers," said Eckhard Pfeiffer, Compaq chairman and chief executive.
Under the customer choice program, Compaq-authorized VARs that refer customers to Compaq receive a 6 percent agent fee for notebooks, desktops and options sold through DirectPlus and 10 percent for servers.
Whether Compaq's direct efforts will hurt or help a VAR's bottom line depends on the nature of the VAR's business, said VARs. ....
...."[It] doesn't make a lot of sense for me to sell Compaq because I'm just competing against Compaq," said Jared Knowlton, sales manager at Capitol Computers, Augusta, Maine. "We've got enough competition with the guy down the road. We don't need to be competing with the people we're partnered with."
Referring customers to Compaq is potentially very dangerous for VARs and small businesses, said Barbara Marusiak, president of FiestaNet Communications Inc., a Phoenix-based VAR and ISP. "I'm worried Compaq will not give my customers the best solutions for their needs, and I won't be able to help them with their hardware purchases," she said. Another concern is Compaq will eliminate agent fees once it has established a strong base of customers.
Compaq's direct model will have to remain channel-friendly or VARs will dump Compaq for a channel-friendly vendor, said Daniluk.
"If direct ever means that Compaq eats into our business model, then we will stop referring customers to Compaq," said Marusiak.
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