Compaq Kills Off Online Competition

Scott writes "It sounds like standard offline retailers weren't very happy with being consistently undersold by online-only retailers, and asked Compaq to fix it. Well, they did. For the next 90 days Compaq has suspended sales of it's boxes to companies who only sell through the web. Compaq also ordered Ingram Micro, who wholesale everything imaginable to retailers to halt sales to their online-only customers. "

Comments

It's more of a problem than you think

[Jon Peterson]

I hope someone notices this in between the cries of horror.

I've just completed an e-commerce website for a font foundry (a company that makes fonts). They won't sell you a font via the website if you live in a country with a physical reseller - you have to go via the reseller.

At a glance this is patently stupid. However, from the font foundry's point of view it is very sensible. They currently get 100% of their revenue from about 6 resellers in about as many countries. Let us suppose after being running for 1 month, the website accounts for 3% of their revenue (realism at work).

If one of their resellers got so annoyed that their own supplier is undercutting them that they stopped reselling fonts from that foundry, the foundry would suffer a 14% drop in revenue. That would be crippling. Possibly, a percentage of that 14% would start using the web site, but not instantly and not all of them.

The cash flow problem are significant, to put it mildly.

That said, Compaq has behaved rather drastically, but people need to understand that businesses have to look after other businesses in the supply chain as well as end users. Compaq only got where it is today with the help of its (old style) resellers. Undercutting them is not the best way to say "thank you".

How I see it.

[Jon Peterson]

"Who, outside of complete neophytes buy Compaq's anyhow? "

I'm no fan of Compaq, but let's look at what's on offer from these big over-priced corporates

1.Proprietary case

Which is easier to remove (no screwdriver), and easier to lock down with padlock systems.

2.Proprietary Hardware

Like, Sun, Irix, etc. More expensive, but more reliable. By using the same supplier for all hardware, incomatabilites are reduced.

Compaq also offers features like network reporting of hardware failure. Allows an admin to, for instance, alter BIOS settings on the 400 desktops on floors 4-6 of the office, all in one go, by remote.

3.Proprietary loader that hides all the system info (like card type, memory count, and peripheral assay) from view.

That's annoying, but then since you specced the machine, you don't really need to know this.

4.IDIOTIC use of completely separate forms of power management (BIOS, Windows, and their own proprietary power manager), all of which screw network connections."

Can't say if it screws up the network. Advanced power management features are very important when you are managing 2000+ machines. Do you want to send someone round re-booting them by hand? With these systems, you could reboot 1500 machines remotely, and then get a report of which machines failed to come back to online status and then send an engineer out to check those machines.

The issues of running a kick-ass home system and 20,000 systems across a multi-national company have remarkably little in common. Compaq, let's face it, is geared more towards one and not the other.