Compaq pulled off its second coup of the week on Wednesday, signing up to be the exclusive PC supplier to US retail giant Radio Shack, at the expense of IBM.
The three-year deal brings Compaq back into the consumer market it largely turned its back on a few years ago, and is likely to be mirrored in similar contracts in Europe.
Under the new agreement, Compaq will provide a line of configured Presarios to the 7,000-store Radio Shack chain, which is owned by Tandy.
Three PC models will appear on the shelves from March, including sub-$1,000 machines.
One longer term aim will be to set up 'stores-within-stores', dedicated to Compaq equipment, in the predominantly small scale, local market Radio Shack stores.
The deal is a blow for IBM, which was Radio Shack?s exclusive PC supplier until Wednesday. Compaq has been expanding rapidly, largely due to aggressive marketing of its low end PCs, to strengthen its position at the head of the PC market.
Predictably, IBM claims the deal will not adversely affect its sales. ?We aim to compete with Compaq not in the smaller stores but by using the larger stores. As part of a new business strategy we will introduce our own idea of a store-within-a-store, allowing the customer to construct their own PC on a special kiosk. The reseller gets the commission and it will draw in the kids,? a spokesman said.
But Scott Miller, an analyst at IDC, believes the deal symbolises an IBM under siege. ?Although I?m not convinced the Radio Shack stores will sell that many PCs for Compaq, it illustrates their sheer momentum,? he said.
?IBM had a horrible year last year, although they recovered slightly in the fourth quarter. They?ve only shown occasional flashes of brilliance in the consumer PC market, like with the modular S series.?
A spokeswoman for Tandy in the UK said it had no plans to change its main PC supplier. Omega has an 80 per cent share and IBM 20 per cent in these stores.
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