Leader: Channel Tremors are a Real Warning

An earthquake usually begins with some tremors. They are a beginning and a warning and there have been a few of them this week in the channel. Channel commitment from vendors can be a fragile commodity.

So Compaq cannot really complain about the storm which has erupted over the rumours that it is in negotiations to buy Gateway 2000. Already in the US the heat has got so bad that Rick Rose, chairman of Dataflex Corporation, has said that if it happens his company will never sell Compaq kit again.

Now this is still a rumour. It may not be true. But Compaq?s denials may also be merely another business tool as talks continue. Compaq, however, should stop and take stock of what its channel partners are saying. They are not amused by the possibility that more of their business may be sucked back into the vendor?s pockets at a time when the direct model is being eyed up by others. Compaq should be cuddling and comforting its channel partners, not hitting them over the head with a blunt instrument.

AST has announced this week that it is pulling out of the retail sector to concentrate on corporate business. It is, in fact, rationalising its channel. This is not just a reaction to troubled times and takeover by Samsung ? it is a realistic business decision based on the fact that unless you are prepared to put in place the necessary marketing expertise and money to shift products off the shelf, the retail experience will be a bruising one, as the Escom fiasco showed. And AST has made this move leaving the retail channel plenty of time to adjust. Concentrating on the corporate market is logical and has made AST?s rivals jittery.

Some of them have been saying that, in a last-ditch attempt to turn round its fortunes, AST is getting out of a market it has failed in. The truth may be more prosaic. Retail demands much of any vendor and sometimes it is not worth the effort. Escom saw it as a panacea for all its problems and went into a reality free-fall that ignored the economics of running high street operations. AST has always been more prudent and when its margins were being squeezed too tightly, it got out while the going was not too rough.

But it would be unfortunate if, just when AST starts getting the measure of where its growth will come from, Compaq heads off down the wrong path.