Compaq sets out its stall on contracts

Compaq has terminated all UK distribution contracts with three months' notice for renewal, as a precursor to renegotiating terms and conditions, following the acquisition of Digital last year.

The vendor now has a total of 12 authorised distributors, having inherited Westcoast, Ideal Hardware and Storm from Digital. Distributors confirmed that their contracts have been terminated and that revised contracts will be re-issued to come into effect on 1 January 1999.

A source at one distributor speculated that one reason for making the contracts void was to enable the vendor to raise the threshold for the minimum level of Compaq business expected from distribution. He also believed the vendor would go on to cull the number of direct resellers it has, by pushing more dealers to source from distributors.

Barry Dohdai, marketing manager at reseller Hemini, agreed and said Compaq intended to bring down the number of resellers that buy direct from Compaq from about 50 to 10 between January and August next year. 'By then, most of the Digital kit will have been swallowed up (by the channel),' he said.

He also thought distributors could be axed: 'This two to three-month period will be the decider as to who Compaq keeps. Digital partners sell in completely different ways to Compaq partners. Where will the bulk of business come from?'

Compaq was unavailable for comment.