Compaq has ditched its indirect only sales model and will begin selling hardware directly to corporate customers and consumers by the end of the year.
The move is one of a series of sweeping changes designed to slash annual costs by $2 billion and help the company compete with fast growing arch rival Dell. (see Newswire 17 June)
The direct service, including Internet ordering facilities, is expected to be fully operational by the year's end, following a third quarter pilot.
Compaq Emea vice president Kasper Rorsted said he expected 25 per cent of sales would be direct by the end of next year.
This would see Compaq handling at least $7 billion worth of business next year, based on its 1998 results, which showed product sales of $27.3 billion.
Rorsted was unable to supply details of Compaq's pricing strategy or lead times for products ordered directly.
Senior analyst at channel research consultancy Canalys, Sandy Calls-Summers, said the move would be disastrous for Compaq.
"We can hark back a long way and say that a hybrid distribution model strategy never works," Calls-Summers said.
"Any sane reseller" was unlikely to remain loyal to Compaq and would probably begin pushing products from rival vendors instead, Calls-Summers said.
"Compaq has significant volumes through the channel today and if they're prepared to cannibalise it, their large channel partners won't be supportive at all," she said.
Compaq's Rorsted denied that his company was looking to steal business from its channel partners.
"We have no desire to go out and change long standing and satisfactory arrangements," Rorsted said. "It's based on what the customer wants."
He insisted the change did not spell the end of Compaq's channel business.
"We will see a different role for our channel to play over time. Channel partners will focus on value added services. The channel model won't disappear," he said.
Hardware marketing manager at Computacenter, Compaq's largest reseller in Europe, Trevor Pugsley, denied the move was a threat to its business.
Computacenter's key strength was its vendor independence and corporate customers who wanted to buy via the Internet had a choice of 30,000 products from Computacenter, Pugsley said.
"No one manufacturer gives the best of breed in every area - our strength is about choice. The customer chooses what's the best product for their requirements - we need to prove we're the best route to buy it," he said.
Pugsley predicted Compaq's change of strategy would result in a reduction the number of dealers in the long term.
"Anyone's who's not adding value doesn't deserve to be selling the products," he said.
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