The strongest signal yet of a shake-up of Compaq’s local distribution channel has been given by the man at the top, Eckhard Pfeiffer, who spoke during a visit to Sydney last week.
“If the customer wants it direct they will get it,” says Pfeiffer, Compaq’s president and chief executive. “If they want it through the channel they can do that too.” Pfeiffer was outlining Compaq’s strategy of taking charge of customer relationships, while moving away from its traditional PC vendor roots into the contemporary world of the Internet.
Pfeiffer concedes he does not know the details of the New Zealand reseller market but says a new five-point distribution plan is a global Compaq strategy. To facilitate Compaq’s involvement in the “Internet revolution”, the five-point scheme stipulates that Compaq will be focusing on Internet-enabled enterprise solutions, Internet PCs and appliances, Compaq.com, its Alta Vista investment and supply chain management.
Pfeiffer says Compaq has studied the motor vehicle industry for models of direct Web-based marketing. “There are some similarities with the motor vehicle trade but also many differences. The similarities are in the distribution chain. First we need to cut down the cycle time so we can ship our models quickly to customers. This can be done direct or through resellers using kiosk facilities.
“Second, our product developments will drive customers to both resellers and ourselves. We need to hit the right buttons with consumers through product quality.” Pfeiffer says so long as Compaq is producing world-beating equipment, customers will demand the product from resellers. “But there will always be a need for our channel partners,” he says.
Compaq New Zealand communications director Tony Lambert says there is no change planned for the distribution strategy at this time. Currently the local operation has a hybrid model of using the channel for PC products and selling direct for Compaq services, Alpha and Tandem products. However, the vast majority of customers go through the channel and account for 75% of Compaq NZ’s revenue, according to Lambert. “Most people want to go through the channel because resellers provide all sorts of other services. New Zealand has an extremely strong channel here, probably the strongest in the world. It’s because our market is small and we traditionally have had a lot of distributors and resellers because companies are not often directly represented here.”
Pfeiffer is adamant that direct and indirect go-to-market models can co-exist. “A first-time buyer goes to a retailer and Compaq is there. At the same time, consumers will be looking on our Web site to see what Compaq can offer.”
Yet the channel has reason to be concerned when Compaq initiates campaigns to give away free PCs in an attempt to tap into the large number of people who haven’t yet bought a computer.