Compaq Computer Corp is aggressively ramping up its small and medium PC business with the addition US retail giants CompUSA, Office Depot, OfficeMax and Staples as outlets for its Prosignia line of servers, desktops and notebooks, including new models announced yesterday – see separate story.
The Prosignia line launched last year formed the basis of Compaq’s high-stakes entry into direct sales, a move that angered Compaq’s traditional reseller channel and led the company to create programs rewarding dealers for participating in Prosignia sales. Moreover, in a bid to insure that resellers can get new products as quickly as possible, as well as to overcome supply bottlenecks and large inventories, Compaq has called on Tech Data Corp and Ingram Micro Inc, the industry’s two largest distributors, to fulfill orders to the PartnerDirect program under which resellers can order Prosignias directly from Compaq.
Industry watchers say the move underscores the increasing importance of distributors as partners to manufacturers and integrators, as the likes of Tech Data and Ingram seek to leverage their logistics and assembly expertise as margins continue to decline in their traditional businesses. The two companies will co-locate in Compaq’s Houston-based manufacturing facility and provide call center, third party products and complex configuration support. Compaq, which has risked upsetting delicate relationships with its resellers further by making it easier for customers to buy Presario consumer PCs from its web site, claims it has become the first company to successfully marry reseller distribution with direct and hopes that it has finally got the balance between the two models right.
Although Compaq led PC server sales to US small and medium sized businesses in the fourth quarter of last year and claimed to be selling more than $1m Prosignias a day from its web site at the beginning of the year, the company recently said first quarter Prosignia sales to small and medium businesses were tracking expectations for the quarter, which sent its share price sliding.
