Compaq in direct action

In his boldest move since taking over the reigns from Eckhard Pfeiffer, Compaq chief executive Michael Capellas has bought the distribution and configuration facilities of US wholesaler and VAR Inacom for $370m (£231m).

In his boldest move since taking over the reigns from Eckhard Pfeiffer, Compaq chief executive Michael Capellas has bought the distribution and configuration facilities of US wholesaler and VAR Inacom for $370m (£231m).

The vendor could also buy or contract European distributors to increase its direct sales, according to analysts.

Last week, Capellas said: "Our major customers want to go direct." He added that Compaq intends to increase its direct sales capabilities in Europe.

Brian Pierce, distribution analyst at IDC, has tipped Specialist Computer Holdings (SCH) distribution subsidiary ETC or Computacenter Distribution as possible targets. "It will be difficult for Compaq to serve all of Europe by buying just one company, but it may use the UK as a test bed," he said.

SCH and Computacenter will be interested in any deal that would give them the services business needed, if Compaq was to increase its direct sales into corporate customers.

Phil Williams, corporate development manager at Computacenter, said no discussions were taking place with Compaq.

But Pierce said all the major vendors are moving towards a hybrid indirect/direct business models - including Dell and Gateway - and Compaq risks losing its channel partners through poor implementation of its strategy.

Neil Marshall, director of European channel strategy at Compaq, told CRN: "We realise we have to quickly communicate to our partners the specific mechanisms for rewarding the channel."

Marshall said in addition to a fee for passing orders on to Compaq, partners that resell product will receive a fee for the value they bring, such as pre-sales, credit and returns, that customers do not want added to the price.

Peter White, managing director of Compaq VAR Hawke Systems, said: "Compaq buying a distie would concern me if I was in the SME market. I'm used to competing against SCC and Computacenter already. Compaq has no choice but to pursue direct sales for commodity items.

"Our biggest problem is pricing visibility. The days when installation and services can be hidden in product price are gone. For desktops, we explicitly charge for services and don't care where the boxes are bought from."

White said he is concerned by how high-end Compaq believed direct sales could go.