Compaq customers take reseller route

Trial period offers no definite conclusion as 65 per cent favour indirect model.

Troubled systems and services giant Compaq is still facing an indirect versus direct conundrum over how to sell its products and services as the trial period of its customer choice sales model ends this quarter.

Compaq's customer choice model offers the ability to buy goods directly from Compaq, over the web or phone, or with the assistance of a reseller.

But since its introduction, the model has caused anxiety in the indirect channel.

Gareth Cadwallader, director of ESSG, Compaq's fledgling enterprise systems and services group, said: "There's always a tension in the relationship and this has put a little bit of frisson in that tension. Some things are inevitable. There is no way that we are going to start selling over the web without the channel becoming anxious."

According to Cadwallader, Compaq has carried out a lot of research, both worldwide and in the UK, to find out how customers want to buy.

Overall, of the large and very large customers questioned, 35 per cent of the market want to buy the basic product and strip it of channel value, and 65 per cent want to buy indirect. Compaq hopes its direct sales will grow to 40 per cent next year.

The customer choice operation is in phase one, the trial period, which is scheduled to be completed in this quarter. Phase two is due to end before the end of the year and will be co-ordinated by Compaq's Glasgow call centre.

"So far, we haven't found a flood of customers who tell us that we must do business this way, or else," said Cadwallader.

"So while we need to be decisive and establish this customer choice model, we are taking it at a sensible pace, that way we can really understand what people want."

But selling direct to customers does not necessarily disenfranchise the channel altogether, according to Cadwallader: "We are finding that a lot of work we're doing is tying the channel back in.

"It is our task to reach a more stable model while keeping the confidence of our partners," he added.

But a source familiar with Compaq has suggested that a lot must be done to calm the fears of its traditional channel following the recent disarray at the company that has included a string of poor results, the departure of several of its top management and the erosion of its market share by Dell and IBM.