Resellers hit by Compaq price hike

Resellers were left stunned by surprise losses incurred as a result of Compaq's unprecedented price increases after the PC vendor's OEM agreement with Intel was called into question two weeks ago.

As exclusively reported in PC Dealer last week, Compaq raised the price of its desktops to resellers after Intel bumped up the price of its scarce Pentium II 266 and 300 MHz processors.

The manufacturer sent an email to selected resellers, informing them of its need to raise prices as a result of Intel 'de-committing on these processors and raising the price to Compaq'. It also stated 12 desktop products were listed as having to increase in price.

But Compaq's dealers were this week trying to come to terms with orders already placed with customers at an agreed price.

They found themselves having to absorb the price difference that arose as a result of the wrangle between the two manufacturing giants.

One reseller - who wished to remain anonymous - said his business will have to make up the losses on two pre-agreed supply deals. As a second-tier Compaq reseller, the company has no price protection.

He added: 'Without any notification, the price was hiked by 10 per cent or so over the weekend. This has left us quoting users in good faith and obtaining orders that we then find are loss making.'

David Petts, director of commercial business at Compaq, categorically refuted suggestions that the PC vendor raised its prices due to a corresponding hike in chip prices by Intel, even though the email sent out by Fiona Harnden, sales manager of indirect channel sales at Compaq, laid the blame squarely at Intel's door.

'Raising prices was entirely our own action in response to the chip shortage.

The objective was to temper demand to fulfil it,' he said.

Intel refused to discuss its relationship with Compaq.