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Compaq Kills Off Online Competition 73

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. "
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Compaq Kills Off Online Competition

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  • by Anonymous Coward
    Having worked for both Compaq sales and Ingram Micro, this is just the latest in Compaq's "Shoot Ourselves in the Foot" sales strategy. The attitude when I was there (several years ago) was "We'll do whatever it takes to make a sale, but heaven forbid we upset the retail stores." This attitude all but killed Compaq's direct marketing arm, and I'm not at all surprised they made this move.
    In response to the person who asked if it was legal to do this, I can't say for certain, but since Compaq requires all of its vendors to be authorized to sell, their product, they can revoke those authorizations at any time. I would think a class-action suit would stand a pretty good chance , but that would take time and money.

  • by Anonymous Coward
    If anyone read the article further, it said only certain Presario models, which is fine by me.. Their Presarios have horrid quailty and design (i.e. junk), as they are OEM'ed by Mitac, which make crappy clone boxes under their own name also.. Compaq's Deskpro, Prolinea and Proliant lines are MUCH better in design, quality, and functionality, as those are actually their "flagship" products made for business (mainly corporations who buy Compaqs in the hundreds at a time)...
  • by Anonymous Coward
    I'm getting 2 1850Rs to run primary/secondary DNS.


    o 3 disks allow me to run a mirror + hot spare
    o 2 words: form factor!
    o price

    Now, I know it'll be suck-ass hard to drop RedHat on these (I did so on a 1600R, was a mess) but I couldn't find a similar competitor with a similar price.. VAResearch never got back to me on a single-PII/celeron system featuring 3 disks and a rackmount chassis, they seem to only be interested in the quad proc servers.. LinuxHW gave me a good quote, but getting another vendor added for this one purpose drove the beandroids nuts so I had to take the path o' least resistance..

    .. though Compaq junk is highly bitchy with RedHat

    .. though I'm philosophically opposed to a lot of Compaq junk (proprietary home cases, support call fiasco, etc)

    .. it's just that when you hit the real world, unfortunately, the people who know aren't always the people who hold the wallet..

    Still, I guess it'll be interesting to hand-build yet another set o' compaqs.. I actually have a reference RH server mkisofs|cdrecord-ed onto disk so just build a kernel with cd support, mount, copy, reinstall patched kernel/lilo/fdisk, and I should be good to go..

  • Looks to me like the wrong people were too successful with online sales. As soon as one of Compaq's big retail players makes the move to Internet sales, this will change.

    What strikes me as hilarious is this "retailers give 'real' support" argument. For the last several years, I haven't even wasted my time trying to get support from local retailers--I go straight to the manufacturer's web site. How in the hell can you get support from someone who thinks a "SCSI adapter" is a printer cable and Linux is a Windows 95 golf game?
  • They must have sucked in all of the bad marketing from DEC or something. Probabally just another string of corperate blunders that seem to plague all of the major computer manufacturers.
  • Based on recent experience of companies stock prices jumping insanely based on press releases (K-Tel, Playboy and Zapata come to mind (if my memory serves me correctly)), it will be interesting to see if this has an adverse affect on CPQ's stock price since they are moving away (even it is only for some products, and only temporarily) from the 'net...

    From what I can gather, the announcement was made after COB last night, so it'll be interesting to see what happens today (actually, it's +1 - go figure).

  • `Our top strategic priority is Internet leadership in the industry,'' Pfeiffer, who is also Compaq's president, said at a news conference.

    Funny.. Is halting online sales of your product being a good "Internet leader"?

    Did I miss a step?
  • by mackga ( 990 )
    Not that I really care what Compaq does - my next box will be from VA Research or SWT - but this does seem kind of backasswards, given what Dell and Gateway have been able to do via the web sales approach. *Shrug* Marketing decisions are a mystery to me - so are marketdriods.
  • if you want my car, am I legally required to sell it to you?

    Certainly not. The Rules are, if you are a publicly traded corperation, and you sell your product to x, y, and z, you must also sell to w unless you can show that w somehow damages your reputation (simplified, as I understand it).

    Standard disclaimer:I am not a lawyer, nor do I play one on TV.

  • True, there aren't that many local shops around, but there are a few. Personally, I go to one with compeditive prices and helpful people.

    They may be a massive $5 more expensive than web order in some cases, but it's generally available NOW, and they will allow me to try it out, and trade for another model if I have any problems (including not being able to get a working driver. Add to that they give me HONEST opinions of quality and usefulness. Finally, they don't charge me the Microsoft tax. For all that, they can have the extra $5

    Many such places are also on the web.

    However, Compaq is not supporting those shops by cutting off web retailers. They are supporting the super-megalo-marts.

    I suspect that the mega-marts will be a passing thing. The same forces that drive customers to accept less service for lower prices at the mega-mart will eventually drive them to web based business. Mom-and-Pop are wired these days, and are less likely to be mired in corperate inertia. I wish them well.

  • Get with the program. Setup a Website, ya slackers... ;>
  • Go buy yourself a real computer. Get a Sun or an SGI or something. :)
  • by Static ( 1229 )
    It doesn't stop the local resellers putting a huge mark-up on the product!

    Example: I wanted to buy an Ensoniq Soundscape Elite a year or so ago. In the local store it was AU$400. On Ensoniq's web site, it was US$170 or so. But they wouldn't sell to me over the web 'cause they had an Australian distributor. Who wouldn't sell retail! My choice: Pay the AU$400 or physically go to the US and buy it there!

    Whilst your comments regarding resellers are valid, certainly the prices should be comparable. If the reseller's prices are hugely higher for no apparant reason, then we have a middle-man effect that the vendor should probably have look at in the interest of their own customers.

  • 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".

  • "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.
  • by byoung ( 2340 )
    I can't believe how misguided Compaq is. Dell has been consistently growing (and growing) by going direct (and avoiding the hassles of things like large inventory, etc). Even Jesse Berst has commented that direct sales is something that Compaq needs to embrace.

    Do they think that the Internet is going away or something?
  • I'm with you on that one... as someone who works for a company that sells and supports Compaqs, I've taken to snagging any extra rails that pop up after drive replacements, etc., and keeping them in my laptop bag. After the first time I tried to install a drive that didn't come directly from Compaq, I learned my lesson.
  • | But look at it this way. Until Home Depot came
    | along, the mom-n-pops were a booming business.
    | You could setup a small
    | town shop with great customer service and
    | imagine this - the possibility of actually
    | handling something before you buy it.

    Notice the "great customer service" part above. There are a a number of small local computer dealers in the area. Of the three that I've been to in quest of parts, all have been incredibly overpriced, had poor service, and have had very little in stock.

    Now back in the "old" days, it was different, but my sampling of "local" computer stores leaves me heading back to mail order/online businesses every time!

    Case in point - wanted to purchaase an ATX case for my new motherboard. Now this isn't a particularly small or light item and I wanted it quickly, so I went to the local computer shop. For the price they wanted for the case, I could have bought the *same* case mail order and had it delivered next day air ... *and* still have $25 left over!!! I can see paying a little more than from a mail order house for the convenience and to help out the local guy, but I'm not going to let myself be royally screwed in the name of local business.

    Disclaimwr: Sure, there must be a lot of these great local shops. I've just never found one since 1992.
  • All of the Compaqs that I have been forced to use have a bunch of propietary junk on the disk and non-standard hardware.

    I say buy Micron, Dell, or build your own.

  • If you read the article a little closer, you'd see that Compaq also quit selling systems online themselves, and then only for specific models (as their resellers were bitching that
    online retailers were bettering prices).

    FUD. Rob, when are we going to see some GEEK news
    on here? I can get this stuff off of cnn or
  • Other than the disgusting precedent this sets, I cannot say that I care all that much about it.

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

    1. Proprietary case
    2. Proprietary Hardware
    3. Proprietary loader that hides all the system info (like card type, memory count, and peripheral assay) from view.
    4. IDIOTIC use of completely separate forms of power management (BIOS, Windows, and their own proprietary power manager), all of which screw network connections.

    Unfortunately these dummified systems are becoming status quo for prebuilts from the "Big Guys".

    Me? I'll stick with building my own.

    Chas - The one, the only.
    THANK GOD!!!

  • That seems like the most foolish move I've heard of from Compaq. Glad I dont own any stock! The Internet is the future of sales (I actually hate to see it, the current hyper-commericialization of the Internet is making it but a shadow of what it once was) whether they like it or not.

    The need to realize that companies like Cyberian Outpost are their best friends for moving into the next millenia. Instead, they shit on them. It will be interesting to see if online companies even allow them back into the fold.

    Duh, which way do you point the gun?

  • I've been trying to convince my employer to consider buying some kind of PC other than Compaq, because you can get better cheaper. I'd despaired of finding any ammo to use in my against them...but this is perfect! Thanks, Compaq.
  • Bell Atlantic can not service a Mac because, for all reasons, it is too difficult.

    Compaq will now stop this pesky little network from interfering with their legitemate business.

    Who is next? A good day for Microsoft to relaunch Bob, I would say.

    We can declare February 23th the official Clueless Corporation Day. Maybe, if we can convince them all to concentrate their crap in one day, we can all be happier for the rest of the year.
  • Isn't this a way to help retailers keep higher prices?

    "Man könnte froh sein, wenn die Luft so rein wäre wie das Bier"
    "We could be happy if the air was as pure as the beer"
  • Actully Dell is now, but here we're lucky enough to have standard ATX systems with asus P2L97 and P2B motherboards, no funky weird proprietary crap here.

    If you can beat you computer at chess, try kickboxing

  • This is just silly! They stopped shipping to online retailers because shops couldn't match the prices??? Its called competition boys! If you can't keep up then you drop out. Sorry but thats just a sad fact of buisness. If the online business is so "insignificant" and "they weren't even on our radar until recently" then why would they stop shipping to them?
    my .02
  • Compaq's actions might be a violation of a contract, but as far as being against the law, I certainly hope not. I don't think you can legally force me to sell to you if I don't want to. If you want my car, am I legally required to sell it to you? If you want to buy 500,000 PCs, am I legally required to do so?
  • ``All of the programs we offer are really inappropriate'' for Internet retailing, Adams said of how Compaq was rethinking its approach to Web sales. ``How do you have programs that help you optimize and grow that business?'' she asked.
    Well, if they don't even teach you that in business school, I might reconsider wasting $70k+ and two years of my life for an MBA. Maybe Adams should take a look at the "programs" Dells has successfully iplemented in the past ten years.
  • That is very much like standing on the shore, and debating whether the coming tidal wave is 3000ft high or 3500ft high. It don't matter. If you are on the shore when it comes, you dead. Solution?
    simple. Get with the program. these groups that are fighting the web and what it means, are standing on the shore with a chinzy life preserver
    Good Luck. How long can you tread water?
  • As if i would buy a compaq!
    This will only hurt them i buy a fair amount of equipmet and I haven't gone to a retail store for 2 years.
    If you bought it retail you paid to much!!
  • What? You're kidding right? How many Mom & Pop computer shops do you know that are still around? Maybe a handful if you live in a big city. Most of the sales *are* from COMPUSA and Circuit City, hardly neighborhood organizations. From the sound of those Web companies, the mom-and-pop contigent has moved online.

Marvelous! The super-user's going to boot me! What a finely tuned response to the situation!