Stuck in the middle with you
Compaq pleads innocent to charges of channel neglect - it has never been so committed.
Over the past few months, Compaq has made a number of announcements been so committed. which will impact the way it does business with its customers and with the channel. These changes have led to speculation about Compaq's commitment to the channel.
There has been a lot of guessing, and of putting two and two together and making five, so I would like to clarify Compaq's position and dispel the myth that its commitment to the channel is waning.
Compaq is not turning its back on the channel. Quite the contrary - it is fully committed to its reseller channel and is investing in it more heavily than ever before. For instance, with the recent acquisition of Tandem, Compaq is looking to add some of Tandem's products to the Compaq channel. Any changes made in the way Compaq interfaces with the channel must ensure that it responds to the demands of an increasingly broad range of users. To maintain this position, we are strengthening channel relationships to better meet the needs of all customers, whether small, medium or large.
Compaq's market leadership in major accounts has been achieved through the strength of its relationship with, and investment in, the channel which serves that market. It is a relationship which direct vendors, especially Dell, are now looking to emulate, with little success. Dell has finally realised that the only means of effectively servicing the large corporate market is through the Compaq channel, yet it and other direct vendors have built up a business based on the philosophy that the middleman adds cost and delivers no value. No vendor with these values can expect to work successfully with the channel.
In fact, direct vendors without the middlemen add cost, not reduce it.
It is just a harder cost for the customer to see. Only once the computers are out of the boxes and the software fails to work with the hardware are the costs counted. Direct vendors also neglect to say how much extra it costs to put together a working IT system without the skills of the reseller. They fail to give the user any choice, and they neither understand nor care about an SME's business. The channel on the other hand gives this and so much more.
Compaq believes the only way to sell to the SME customer is through the channel. However, collectively, we have not done a good job of highlighting the inadequacies of the direct selling model to the customer. We realise we have been slow to communicate the value of the channel outside the corporate market. It is something that we are now addressing. Our latest initiatives are the first steps to rectifying this situation.
Compaq is now investing significantly to enable better service to the SME market and deliver that value to the user without fuss. The recently opened Glasgow call centre will ensure the customer has the option of talking to Compaq for advice but can also be transferred to the channel, which receives all the information about the customer's requirements in order to complete the sale. Only by integrating our channel with a call centre of this nature does Compaq believe it can prove the value of the reseller channel.
The nonsense written about Compaq going direct has focused on a pilot which represents only one aspect of the call centre - working with channel partners to address the SoHo market. This is a market which is currently not served cost-effectively through Compaq's existing channel infrastructure, and one which our research shows the channel is currently not interested in selling to. To extend its lead as the number one PC manufacturer, Compaq must adapt its model to ensure that all segments of the market are addressed.
For both Compaq and its channel, sales into this market represent incremental business, business which is currently going straight to the direct vendors.
We cannot afford to ignore the needs of the end user - that is the bottom line for any business large or small.
As Compaq moves forward, by integrating the channel more closely with the demand generation centre in Glasgow, we will be able to show customers what a difference the channel makes. We are now looking to the channel to help us succeed in the SME market. We have done it successfully in the large corporate market, we are now looking for your commitment to help us do it in all other markets.