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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (66732)	8/18/1999 11:44:00 AM
From: John Koligman	Read Replies (1) \| Respond to of 97611

While on the subject of market share, I noticed an article in News.Com the other day where McNealy of Sun was talking about how they are supplying GM with servers and hardware for their E-business. I remember in the recent past that on the PC side GM was a CPQ customer, which may have been 'helped' by the fact that EP was on the GM board. It looks as if they may have lost at least some of the higher margin server business to Sun. Perhaps Rudedog might know more... Regards, John

To: Elwood P. Dowd who wrote (66732)	8/18/1999 11:46:00 AM
From: JRI	Respond to of 97611

El- It seems that everyone, I mean everyone, vastly underestimated the difficulty of an indirect vendor going direct.....even today, many commentators refuse to see it as a problem/advantage (for the directs)......apparently, it is a process that is worse than ripping off all your skin....and the problem is...if you do it slowly, incrementally (like ripping off your skin)....the pain lasts a lot longer, and you allow for infections and other ailments... Place on top of this, a huge technology merger....(CPQ/DEC) which in a lot of ways should/does make sense...but, the fact is, the merger of two large technology companies is ALWAYS extremely difficult, and history has not been kind (not a lot of good examples of companies who have pulled it off...and quickly)... Former CEO Pfeiffer, although strong in some areas, was not very good in anticipating the size and scope of Dell's (direct) threat...some, perhaps due to pride...nonetheless, this exacerbated the current mess for sure... Can CPQ turn it around? Perhaps...but, to use another analogy, going indirect to direct is like going from communism to capitalism....and no one has done that successfully (yet)....look how Russia is struggling... Maybe CPQ should consider vastly scaling back its PC production to only the most highly profitable units...and spend its time, focus, energy on those market segments where it is competitive/has a nice cost/technological advantage....a smaller, but more profitable Compaq? Is it really so important to be #1 in PC unit sales, but be rocky in profitability??? Final thought: Compaq (the stock) should do pretty well between now January..that gives Capellas some breathing room....let's see what he comes up with...for the sake of Compaq shareholders, he probably should rip the skin off pretty fast.....