Compaq halts deals with Net-only resellers

Compaq Computer has asked two of its leading distributors to stop selling its Presario consumer PCs to retailers whose primary business is conducted on the Internet until it can craft programs specific to the Internet.

Compaq sells Presarios through distributors Tech Data and Ingram Micro, but retains the right to authorise who they sell to, said Hedy Baker, a Compaq spokeswoman. Over the last several months, Compaq received so many requests from Internet retailers seeking to sell Presarios that it decided to formulate specific programs for them rather than work with them based on Compaq's older channel model, Baker said.

"It was fast becoming a bigger channel than we had anticipated [and] we didn't have programs in place for that channel," Baker said.

She declined to specify what programs it might create specifically for Internet retailers but did say that Compaq intends to have the programs in place -- and re-authorise its distributors to sell to Internet retailers -- within 90 days.

Reseller Cyberian Outpost learned last week that its authorisation to resell Presarios was pulled when a letter from Compaq arrived at Cyberian's Kent, Connecticut, headquarters.

"Evidently they had meant to call me prior to sending the letter [but they did not] and that was upsetting," said Darryl Peck, president and chief executive officer of Cyberian.

However, unlike many Internet retailers, who don't have warehouses full of actual stock, Cyberian's sales at its site will not be interrupted, Peck said. Cyberian has a warehouse, technical staff and other trappings of a traditional retailer, and will continue to sell Presarios to customers, Peck said.

"We're basically a real retailer," Peck said. "The only thing is we market ourselves on the Internet."

According to Peck, Compaq's letter did not provide details of its decision to pull authorisation from its distributors, but the emerging Internet model is clearly something Compaq wanted to consider.

"Maybe they felt that the Internet as a channel with all that wacky pricing was just out of control," Peck said.

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