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

To: leebo who wrote (17615)	2/18/1998 9:42:00 PM
From: S.C. Barnard	Respond to of 97611

I get the sense it isn't what Dell and CPQ really do- It's more what the street thinks they're doing (drifting from fact)that affects price?

To: leebo who wrote (17615)	2/19/1998 8:40:00 AM
From: otter	Read Replies (4) \| Respond to of 97611

re: "What is Dell doing along the "service" lines? Compaq is in an entirely different league." To me, it is becoming plain that a focus on comparing CPQ to Dell (or any other boxmaker) going forward is a mistake. If, by "service" we mean the consulting and integration business that CPQ is buying, then Dell isn't doing that - and doing very well at not doing it. The question I had when the DEC acquisition was announced - and still have - is just how adding a consulting arm will accelerate customers' purchases of CPQ metal.... or vice versa. I have heard and seen vague generalities about cost cutting and 'synergy', but.... As a shareholder, I have a concern about whether my investment in CPQ will pay off or whether CPQ is doing with DEC what AT&T did with NCR. As a consumer of technology, I run a shop with a variety of vendors' equipment and software just as most other shops do. I'm used to it, and I don't need the burdened cost of a consultant at this time to make it better than it is. If I did, there would be plenty to consultants to choose from. That argument had merit some years ago when there was no consumer market; the corporate market was dominated by IBM; and standards based computing meant whatever IBM said it was. The last decade has turned that equation upside down. If the argument is that customers can have a one-stop, one vendor experience with CPQ servers, workstations, and CPQ people can put it all together and run it; then instead of flogging ourselves with comparisons to Dell and GTW, the focus ought to be between CPQ and IBM, for example; and how DEC consultants compete against integrators such as Perot, Hughes, EDS, and so on. The questions about just what CPQ wants to be in the marketplace ought to be in the context of just how acquiring a service arm energizes the company while avoiding the same holes that IBM fell into and has been working so hard to climb out of when they were trying to be all things to all people. So. Hoping that the following comments will generate discussion instead of flames, here are some questions: 1. What is CPQ's plan for keeping and reinforcing the line of DEC servers and workstations? Unless that exists, DEC Unix users will defect to other vendors' equipment. While it isn't a growth area particularly, I doubt that the CPQ label has much natural credibility in that niche. 2. How is CPQ going to reconcile two very different corporate cultures? DEC is mainstream New England. CPQ is Texican. (I finally got to use that word.) 3. How is CPQ going to reconcile two very different marketing strategies? DEC has a number of regional offices with local reps. CPQ uses for the most part, resellers. How does one division avoid competing against another in those areas where there might be overlap? 4. How will CPQ reassure local resellers that sales through the consulting (service) segment in the local market will not cannibalize retail sales - if in fact that is the model? 5. How will CPQ remain competitive if all those in a pipeline to a corporate consumer require a slice of the pie? A worst case scenario would be - (mfg - reseller - consulting - consumer). We assume that this wouldn't happen, but it's clear that at some point in any business model, the pipeline needs to be looked at & kept simple. 6. Just what is CPQ's market? IBM failed miserably in the consumer marketplace; and "service" has only a corporate market. That CPQ is doing well in the consumer marketplace means nothing to a corporate user; and presence in a corporate marketplace is not automatically a plus in the consumer market. The stock market is littered with companies that have crashed and burned trying to be all things to all people. Some of this all may sound a little basic and the answers might seem obvious. When I first heard about the AT&T-NCR acquisition, my reaction was "Great!!". The inventors of Unix (AT&T) who failed at workstations are buying a company that successfully reinvented itself - moved from proprietary to standards based Unix computing and made a strategic commitment to that niche. 1+1=3!! Well, I was wrong, wasn't I? Hence the concern and the questions. Any and all thoughts will be very highly appreciated.