Compaq is expected to announce today that it will start selling PCs via telephone and over the Internet in the US, in a bid to fend off its biggest rival Dell Computer.
Compaq?s decision to sell PCs direct in the US is guaranteed to anger its dealer network, but the number one PC maker is expected to mollify them by paying them a referral fee of around seven per cent on orders they post through to the direct sales operation.
Analysts believe that Compaq, which traditionally sold only through the channel, has no choice but to make a move into the direct market to retain its number one position. It has already launched pilot programmes for small businesses in Europe.
Compaq has been losing share to direct vendor Dell, which has been expanding rapidly and racking up healthy profits thanks to its streamlined direct sales and build to order model.
Compaq?s direct sales operation will be focused on the small to medium-sized business market, according to sources. In the US this is relatively unchartered territory, as unlike consumers and big business, they have been purchasing from dealers rather than directly.
However, analysts believe this sector will provide a growing opportunity as smaller businesses are no longer buying their first computers and are far more secure about their technology route now.
A spokesperson for Compaq UK said that it is ?currently reviewing options?.
This is not the first time Compaq has gone into the direct market. It dipped its toe in the water with a direct sales operation for consumers via free call lines. This had a cold reception as Compaq opted to keep its prices high, hoping it would sell on its brand name and avoid antagonising its dealers.
Compaq will have undoubtedly have its work cut out in the PC market, where prices are falling by around one per cent a week.
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