Compaq today confirmed that it plans to dump a large number of its European distributors, following similar action in the US earlier this year.
As revealed exclusively by VNU Newswire (see Newswire 10 August), the company will drop the majority of its top tier distributors, possibly cutting down the number in the UK from 15 to only one.
Last month, industry analyst IDC said it expects Compaq to cut the total number of Europe wide distributors it uses in the Europe, Middle East and African regions to just one or two. Along with these, IDC said Compaq will retain three or four of what officials call "local heroes" in each country.
In his first visit to Europe since his appointment six weeks ago, Compaq chief executive commented: "We need to simplify our distribution model and reduce our infrastructure costs," he said.
"Inventory is the enemy. There is a role for the channel, but a model where a product is touched many times is obsolete," he warned.
He said that Compaq dramatically reduced the number of distributors it uses in the US and similar moves will be made next in Europe and later in the rest of the world.
It is widely believed that Compaq executives will be taking advantage of Capellas visit to negotiate with distributors in the region and decide on winners and losers.
Capellas did not say when the plan would be executed, but analysts expect the company to act before the end of this year.
For a full interview with Gareth Cadwallader, head of Compaq's UK enterprise business, see today's analysis section.
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