To: jim kelley who wrote (112731 ) 3/26/1999 3:47:00 PM From: Mohan Marette Read Replies (2) | Respond to
Compaq's wavering strategies-They want to do it and they don't.Compaq to revamp Prosignia strategy The presentation will likely be a mix of upbeat news and serious questions. Compaq is expected to announce that it will start selling Prosignia notebooks based around processors from AMD, said sources. To date, AMD processors have largely been used in consumer computers. Inclusion in the Prosignia line will mean that AMD has cracked the business computer market, which is both larger and generally more profitable. Compaq, however, is also expected to discuss changes in its sales strategy for the Prosignia, including a program to better entice its dealers to sell Prosignias. This will likely dredge up the debate that has dogged Compaq for a year: Can a company sell computers directly and through dealers? Striking a balance between these new channels of distribution has not been easy. In February, Compaq told Internet resellers that they were no longer authorized to sell Presario computers for 60 days. The halt came, said sources, because conflicts were erupting between Compaq's standard store retailers, and Web resellers which were undercutting stores by selling at cost on the Internet. "They want to do it [selling both ways], and they don't. I would think of the Prosignia as a trial balloon," said Roger Kay, an analyst at International Data Corporation. Selling computers directly can cut costs, and Compaq has indicated it wants to do more business directly. However, disruptions in the current sales structure could hurt the company drastically. If botched, a shift to direct sales could put a dent in sales for two to three quarters. (Reuters contributed to this report.)
