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To: rudedog who wrote (38325)	4/19/1998 10:44:00 AM
From: Geoff Nunn	Read Replies (1) \| Respond to of 176387

rudedog - thanks for your very informative post. Do you have any thoughts on why CPQ provides protection to its channel resellers? Since the practice is costing CPQ money, in principle it should just as soon be willing to give its resellers a lower price and drop the protection. Why is this protection to the mutual advantage of the two parties? It would seem to me it adds an unnecessary layer of red tape and additional cost to the system. The impression I have is that CPQ practices "resale price maintenance" in the consumer market, where the US1 price normally cannot be discounted. CPQ essentially dictates the price, and the reseller goes along. If the US1 price is set too high and product doesn't get sold, the reseller normally would get burned. But CPQ resellers have the option of returning unsold product to CPQ. This, plus the price protection policy, gives them cover. The question though is whether these arrangements create undue price rigidity and would account for CPQ's inventory bloat problem. When there is unwanted inventory buildup of CPQ products, what that says to me is that the price is too high. Also, please explain VAR. Regards, Geoff