Compaq culls reseller margins

Compaq has rocked its channel by removing all margin on volume products sold online, forcing resellers to abandon the vendor.

Compaq has rocked its channel by removing all margin on volume products sold online, forcing resellers to abandon the vendor.

Compaq's Channel for the Internet Age strategy is designed to win back business from Dell. Many commodity products will be listed and sold from the vendor's Website at the same price offered to distributors, resellers and users.

Nick Offin, director of the partner business unit at Compaq, confirmed the vendor also wants to eradicate stock held in the channel. The Compaq channel will include VARs, distributors and sales mediators. For a fee, the latter will supply Compaq with leads which the vendor will fulfil.

Michael Morgan, general manager of the partner management group at Compaq, said: "We do not see a future for resellers that do not add value. This will be an efficient supply chain with next-day delivery. The Compaq box shifter has been losing business to Dell and this will stop that."

To offer next-day delivery, Compaq is in the process of appointing configuration and build-to-order subcontractors, and developing a logistics operation. Computacenter has been tipped as a configure-to-order partner. Web-only resellers will be encouraged to sign up, but the incentives have not been confirmed.

Ian Fisher, managing director of QED computer services, a Compaq reseller for nine years, said: "It was a bit of a shock. We have been reassessing our relationship with Compaq and this is one of the reasons we have decided to jump ship. Compaq is trying to drive us further into a certain type of business."He added that QED would move to IBM.

However, Compaq will not push the expected reduction in distributor ranks. "We do not intend to reduce distributors Ð we will let resellers vote with their feet," said Morgan.

Andy Brown, analyst at IDC, said: "The move was inevitable but may have been a bit hasty. This will make or break Compaq. It could alienate the smaller players in the channel and, with vendors such as Fujitsu Siemens reaffirming their commitment to the channel, is risky."