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

To: JEFF GREGERSON who wrote (21917)	3/15/1998 6:55:00 PM
From: Orcastraiter	Respond to of 97611

..."This is a strong indication of Compaq's stronghold in the direct channel. It doesn't surprise me that they are loathe to give this up, I imagine it has been and continues to be very profitable for them. They can't go BTO without seriously upsetting this cash cow. "... You are right! CPQ is not going to give up the lead in the direct sales channel. OTOH they need to get into BTO as well. The BTO is the fastest growing sector. Direct sales will always be important. Think of the guy who needs to buy a computer today because his existing computer went down for some reason. He needs to get up and running in less that 24 hours, so BTO won't work for that consumer. Most people don't need a customized system. I'll bet that a lot of the BTO computers shipped are similar, such as the base system. They (DELL and GTW) are building them as fast as they can ship them. So if CPQ can get these "base like" units on the shelves they will sell like hotcakes too, especially if the price is right. And that is where push will come to shove, in the pricing. Consumers are looking for the best value. Who ever can produce the best computer for the least money will gain market share. The company that can chop the most from the price over the next few years will be the winner. That company will very likely be one of the large computer companies like CPQ. They will be able to absorb the reduced profits and tightening margins that will come with the commoditization of computers. They will survive the price war, and be there to sell the boxes of tomorrow. Orca