Compaq tightens channel strategy

Compaq said it plans to fulfil more orders directly and create a centre for its European operations in Zurich as part of a strategy aimed at improving its performance in the region.

In addition to outlining the new strategy, Compaq also announced that Rob Walker, former managing director at Xerox UK, is joining the company on 1 September as vice president and chief operating officer for Compaq Computer, Europe, Middle East and Africa (EMEA).

Werner Koepf, currently vice president and general manager of EMEA, will become chairman and chief executive for the region.

Koepf admitted that Compaq was "coming out of a slow market in Europe" but said that it is now "growing in all areas". He added that the fresh management team would offer "more concentration and better execution" in Europe, a region which accounts for 40 per cent of Compaq's revenues.

Central to Koepf's plans is the creation of Compaq Computer International GmbH, a new entity to handle pan-European accounts which will be based in Zurich. Compaq hopes the creation of a European headquarters, which is scheduled to open this autumn, will help it streamline its operation and respond more quickly to customer demands.

Koepf explained that instead of having to go through to Compaq's headquarters in Houston to make deals, European customers and suppliers will be able to deal directly with European partners through the new centre.

He said customers will have one contact partner and one price, which will allow Compaq to move faster.

Walker told vnunet.com that he is hoping to boost Compaq's professional services revenues, particularly in ecommerce, and grow its presence in the handheld market, as well as boost its more traditional server and storage infrastructure business.

On the sales front, he said Compaq expects some of its channel partners to adopt an agency model and take orders for products which Compaq will itself fulfil, thus minimising the inventory they need to carry.

"It makes more practical sense to do some things direct, for example with a large corporation. We're working to rationalise and better communicate our channel strategy. There's space for current channel partners but we'll change emphasis in some areas," said Walker.

Mitul Mehta, managing director at independent consultants TekPlus, said he didn't expect the percentage of orders fulfilled directly or indirectly to change, although Compaq can be expected to simplify its product ranges and apply different business models to separate parts of its channel.

Chris Martin, a researcher at analysts Xephon, said he doubted whether Compaq had enough knowledge to go direct in certain areas, particularly storage, and that the vendor needed to come up with a clearer strategy.

"I have the impression Compaq hasn't digested all the companies they have bought," said Martin. "Compaq has good systems but it needs to position them to protect its customer base. It needs to learn from the experience of DEC and decide whether it wants to go direct or through the channel."