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Compaq Shifts Focus
Matt Watson writes: "MSNBC is running this story on Compaq's shifting mainly to software and services. The article states that the sluggish PC market is partly to blame." More specifically, Compaq is talking about "industry-specific" packages. Niche marketing, basically, but with a very lage company that can concentrate on certain areas.
they die.
Contrary to the popular belief, there indeed is no God.
Poor DEC. They will never live again. Most of us knew that when Compaq acquired them after Tandem (remember, they bought Tandem and then phased out all Tandem stuff in favor of Compaq hardware) that it was probably not a good thing for DEC. Now it appears that it has happened. Granted, it took 3 years, but still--DEC is the stuff of Legends. I still have a DEC VT plugged in to my Linux servers via serial cables. It's like using a piece of history for daily needs.
I never got to use an Alpha chip. I always wanted one, but I just never got around to it. Now it appears to be too late (what are the real odds of Intel not doing what Compaq did with Tandem?).
"Doubt your doubts and believe your beliefs." -- Switchfoot, Ode to Chin
"Pretty standard in the business. Look on any oil rig, medical shop, mineral company, steel mill, etc, and you'll see standard technology selling at super premiums"
While niche markets are the place to be to make money, the gross margin for the whole business isn't what you would think from the mark-up on the components. R&D, conformance to industry specs, support, and quality/reliability expectations eat up a lot of that money.
Industrial customers don't accept the "blue screens happen" philosophy - they expect your products to work, and for you to stand behind them. I once saw the follow-up from the customer when a mission-critical product failed in a steel mill. 15 member team roaming the halls and shop floor grilling randomly selected employees on procedures, specifications, etc.; parts pulled off shelves at random and tested for specs., etc. Can you imagine the typical commercial software supplier surviving that kind of inspection?
sPh
Niche markets are sweet in that companies can get away with charging absolutely ridiculous prices for otherwise generic hardware. As a case in point I've seen medical equipment where the hardware company charges $15,000 for an interfacing PC, and said PC is nothing more than a $700 clone PC. Pretty standard in the business. Look on any oil rig, medical shop, mineral company, steel mill, etc, and you'll see standard technology selling at super premiums.
At the same time though is this really nothing more than a "please don't pay attention to our results for the next couple of quarters because we're pursuing this great new business" type initiative that is so common in public companies? Given the size of compaq I find it very hard to believe they will do anything to threaten their hardware market.
I see a lot of "I hate Compaq" posts..
For everyone here who's slagging Compaq, why don't you guys go get a REAL Compaq (like a Deskpro) and then tell me what you think.. if all you've had to deal with is a Presario, your opinion is flawed, because you've never seen what they can really do..
I LOVE my Deskpro's - they're completely SILENT - as in NO noise.. they're easy to upgrade.. I can open it up, and install a new CD ROM, or HD, or any expansion card in 5 seconds, without the need for a screwdriver. It's like working with a Formula 1..
Presarios are consumer-level crap - pretty much disposable.. if that's all you've ever seen, you'll surely be disapponted.. but open your mind and see that there is more to Compaq than the Presario..
Dell is supposedly moving into the services business. H-P has (so far unsuccessfully) been attempting the same thing.
IBM has (successfully) moved into the services business, but only because they were already diversified enough to make the move.
The trend isn't new. As long ago as 1999, the writing was on the wall. The problem is, most of these hardware OEMs are going to have a difficult time making the transition. They're used to competing on price, not on service. The OEM business is brutally competitive in the price arena, but let's be honest, most PC clone makers are not really innovating. All they're doing is trying to squeeze inefficiency out of manufacturing and distribution, making money on very thin margins.
Entering services will be difficult for Compaq, just as it has been for Dell, H-P, and all the other OEMs that are jumping on the bandwagon. Compete on price alone at your own peril.
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Anti-flame disclaimer: I am not an expert of Compaq hardware, nor do I know how the current Compaq PCs are shipped. If I am incorrect, it is because this is my impression of Compaq hardware from the past, and that carried on to my current impression of them. If this info does not currently hold true, that is becase Compaq did nothing to change this rather common impression of them and their hardware.
Compaq desktops suck because they are so darn proprietary. They leave very little headroom for upgrades and the upgrades that are available are very expensive. The average user may not notice this but there is a reason that Compaq is getting out of the PC market and the reason is because people are reluctant to buy it due to negative word-of-mouth! Compaq could have easily avoided this common impression by pumping more money into marketing but they didn't. That is one big reason why they are crapping out today. If they would have used more standard equipment and offered better upgrade packages for the older models, they would have been better off in the long run. I understand that the goal was to get people to buy a new PC every time the old one got too old, but that closed mindset came back to bite them really really hard in the Compass.
Of course, that is just my opinion.