re. Whether independent integrators would partner with CPQ:
I worked for a number of years in that environment. The simple answer is that it would depend on (1) whether CPQ was bidding for the same business or not; (2) the value being added to the business by the integration activity (consultants); and (3) a host of other factors.
In the days when I was doing what I did, a good competitive analysis would have told us who was bidding the business, who they were most likely partnered with; what discriminators they would likely be promoting; and their likely cost. That, matched against OUR discriminators and the technology requirements of the business to be had, our own cost, etc. would help us define our partners.
If I were an independent integrator bidding CPQ metal against another independent also bidding CPQ metal, what would be the difference between that and me bidding CPQ metal against CPQ metal and integration? It's hard to do that and not be ratifying the technology component of the CPQ bid. I might still bid CPQ if I'm sure that I have discriminators in integration and the remainder of the metal/technology bid that remains non-CPQ..... and if I could ghost the CPQ integration component..... but it's dangerous. Hence the calls to Dell (and I'm sure, others).
But in the context of technology alone and CPQ in particular, it still isn't simple. There are at least three market segments at issue: PCs, Servers, and the integrators that make it all hang together and work. There is also the question of business practice here in the USA and overseas.
In the specific market of PCs, $ are the largest single factor that would drive a procurement (with certain exceptions); and if its a question of just PCs, there is little value to be added by an integrator. In fact (my bias is showing), if it were PC driven procurement, I'm hard pressed to show how CPQ could compete successfully on $, service, upgradability, and other factors - with or without legacy DEC integrators. Those bidding Dell, Micron, GTW, etc. would probably win more often than not.
IMO, CPQ does have discriminators in server technology (CPQ and Tandem) where the margins are higher, where the integration component has a larger place, and where a merger with DEC can help - if $ can be kept under control, overheads can be managed, and company cultures can be merged successfully. That said, to the extent that an integration deal that would have otherwise contained CPQ servers coupled with Dell PCs now becomes CPQ servers coupled with CPQ PCs, the legacy DEC integrator would have to tell a very strong story outside of the PC component - and minimize the PC rap.
The third factor is whether or not DEC as CPQ (that specific entity alone) can deliver more $ to the bottom line from integration activities than it was doing when it was DEC as DEC. Were their hands tied in bidding only DEC metal? If so, it might be reasonable to assume that being tied to CPQ solutions might result in more wins than before - because of their access to CPQ and Tandem servers. If their hands were NOT tied, but become so, then the win rate might be less. If hands are untied (I assume they won't), then I'm hard pressed to understand how legacy DEC integrators would affect CPQ metal sales on the upside.
In the USA, I can, as an independent integrator, bid Dell PCs, CPQ servers, and my own brilliant integration skills - against a CPQ PC, CPQ server and CPQ integration bid. And, I can win that business, because I can ghost monolithic bids - even when there is mfgr overlap. Overseas, it often isn't that simple, in my experience. The reason is that over there (wherever 'there' is) there is one distributor of the technology in question in the country; and exclusive arrangements can stop me from sourcing the metal elsewhere and bringing it in. In that circumstance, were I to want to bid CPQ servers against the local CPQ distributor, I would be forced to buy the CPQ metal from the same distributor I'm competing against at whatever price that distributor wants to set - if I can buy it at all. The distributor is generally free to say 'no, I won't agree to sell you this technology'. (Restraint of trade isn't as illegal over there as it is here). So, yes. Because the DEC merger gives CPQ an enhanced overseas presence, it would be reasonable to expect more wins of monolithic bids - in those countries.
My own opinion (did you ever think I would get here): Michael Dell is only looking at a part of the puzzle. Unless CPQ can become competitive in the PC arena with Dell, GTW, etc., I think they do risk some losses, because more independents will bid other vendors' PC metal, and can ghost and underprice CPQ PCs. But this can and does happen with or without DEC in the equation. And, it isn't the entire equation. On the other hand, to the extent that CPQ servers show up in more proposals where server technology is dominant can result in some offsetting metal wins. Overseas, its likely win-win. |
