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To: The Phoenix who wrote (66898)	9/23/1998 2:39:00 PM
From: TigerPaw	Read Replies (1) \| Respond to of 176387

5 Unique Product Lines (Direct vs. Indirect) I know I'm butting into your conversation again but it's one of my personality flaws that I have a hard time controlling. I've worked at IBM in the past and still have many contacts. They are always trying to divide up markets or product lines between competing divisions. Some of these try to be direct, some are full service big blue all the way. They never get to really compete with each other since as soon as one division really starts to whip the other the word comes down from Armonk to restructure, change agreements, and quit cannibilizing the other division. The point is they can't really go after the true competitors without hitting their internal competitors and then the big boss puts a stop to it. I'm sure something similar would happen with a mixed channel-direct, its just natural. TP

To: The Phoenix who wrote (66898)	9/23/1998 4:10:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

You are missing a key point in your argument. Suppose Compaq grants exclusivity to an intermediate channel member. There is nothing to prevent that channel member from turning to a Compaq competitor for machines that Compaq is selling direct. In other words, Compaq cannot prevent a channel member from carrying a competing line. And that's what will happen. It isn't an issue of the machines that the channel doesn't carry causing the channels to drop Compaq. Example: suppose Compaq decides that it will continue to sell its retail models, CR, through the channel, but will sell its business model, CB, direct. Now the channel has a vacuum in its business line so it seeks a business model from HP or IBM or Sony or .... Or it simply pushes those business models it currently has harder than before. This must translate to lost sales for Compaq because the channel member will continue to sell business machines to its customers. If you are contending that that signing such an agreement will prevent the channel member from selling competing manufacturers I think this would run afoul of restraint of trade legislation. TTFN, CTC