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To: BGR who wrote (80873)	11/16/1998 9:15:00 PM
From: jay v. harper	Read Replies (2) \| Respond to of 176388

-------------------------------------------------------------------------------- BW0658 NOV 16,1998 17:42 PACIFIC 20:42 EASTERN ( BW)(GLOBAL-TECH-DIST-COUNCL) Direct Sales Strategy Not Likely to be a Winner for Compaq, Predicts Channel Advocate Business Editors & High-Tech Writers SANTA ANA, Calif.--(BUSINESS WIRE)--Nov. 16, 1998--The recent move by Compaq Computer toward a direct sales strategy is a misguided reaction to market forces, said David R. Dukes, chairman of the Global Technology Distribution Council (GTDC). Established in 1998, the GTDC's members include market share leaders in information technology (IT) distribution from around the world. Among one of the most important objectives of the council is to give voice to key industry issues, such as establishing standards in electronic commerce, while also being a powerful advocate of the IT channel and the value it adds for customers. According to Dukes, an 18-year veteran of the IT industry, the new Compaq strategy to sell a portion of its products directly to customers rather than through distributors and resellers may pay some dividends in the short term. "But, within the year, it could cost them significant loss of market share, as they experience the difficulty of competing with their resellers," he said. Compaq is embarking on a strategy that is not cost effective and one from which other vendors ultimately have backed away, Dukes said. "Their new strategy apparently fails to recognize several important factors, including the powerful relationships which resellers have with their customers (the ability to influence brand preference), as well as the importance of third-party products offered by resellers and distributors, which are critical to providing customers a complete solution. "It is surprising that Compaq seems to have forgotten what drove them to No. 1 market share -- the blend of their great products complemented by their unwavering commitment to the channel," Dukes said. According to Dukes, the question now becomes who will benefit from Compaq's new strategy. "Will Hewlett Packard, IBM and other vendors implement programs to strengthen their commitment to the channel? Or will they follow Compaq's move? Should they do so, the current momentum of channel assembly and white boxes will become an absolute tidal wave as market share begins to shift dramatically," Dukes said.

To: BGR who wrote (80873)	11/16/1998 10:20:00 PM
From: yard_man	Respond to of 176388

RE your reponse: No I do not consider earnings to be as random as a coin toss, nor are they independent events. No, I do not think simply that boom follows bust because of some kind of law of averages -- rather in competitive sectors large profits attract competitors. Competitors push margins down. Natural progression. As you have correctly said this is already happening. DELL is at the top of the heap and has done very well in comparison to other players in the market, but the trend to lower margins for the overall business is set -- why do people applaud DELL moving into the server market and the report that DELL is getting a larger share of its revenues from servers? I think the hope is that this is a new area where DELL may compete and reap higher margins than in the PC biz. >>After all your average productivity doesn't drop off all of a sudden in the absence of some extraneous negative factors<< >>I would like to point out though that though macro market prediction is a fairly established field.<< Not sure how to respond here -- macro market prediction may be established, but large changes in the direction of markets always suprise folks and aren't proclaimed beforehand by large numbers of macro forecasters -- so while it may be established that doesn't necessarily mean that many of the practitioners have much that is useful to offer us. Right now everyone is saying our economy may slow a bit but it is fine, while the economies of the world are "in the can." So many reasons are listed as to why our economy will not suffer a protracted downturn -- as the list of reasons gets longer and longer, I began to doubt more and more. I could use a more souped up computer at home and at work -- or I want one, but will it really make me more productive or more productive to the extent to justify the additional expenditure -- I seriously doubt it. That doesn't mean PC sales are going to slow, but I have noted on a day to day basis the contact that I have with the use of computer technoloogy and the uses that companies who provide me services. I fully expect for there to be overinvestement in this technology, overshoot if you will, before people realize that the next upgrade may not be the best use of the money that can be spent. At that time perhaps money will be better spent in other assets, additional people, etc. Whatever. It will happen -- the upgrade cycle will lengthen again. When it does happen it will be like "something out of the blue" and very hard to explain when it actually happens -- in hindsight it will be clear, but at the time it will be a complete suprise -- just as surprising an event as when investors in a given stock find out that the stock they have historically received a 300% return a year from no longer appreciates at that historic rate. When you get ready to say never -- that's when a change is about to happen. Enjoy.