Compaq outlines internet strategy

Compaq Australia managing director Ian Penman has outlined his company's internet strategy and has gone to lengths to explain the ramifications of being ousted by two of its high-profile retailers.

Compaq's decision to pursue a "clicks and mortar" strategy to supply its customers, through internet sales and company-branded stores, has caused a major blue with megastore retailer Harvey Norman.

After HN boss Gerry Harvey pulled the plug on Compaq products in his stores, Coles-Myer subsidiary Harris Technology revealed it intended to discontinue selling Compaq's consumer products.

"Let me put this in context," Penman said at the opening of Compaq's new office (the re-branded Digital building) in Adelaide.

"Our retail business is less than 7 per cent of our total business and Harvey Norman is less than half of our retail business.

"Harris Technology at this moment sells very limited amounts of our consumer Presario. They sell mainly Armadas and our servers, which they are going to continue to sell.

"We believe there's about 45 per cent of people in the small to medium enterprise space who don't buy from retailers at all. The internet space will help us there.

"For example, in one suburb, there's a Harvey Norman store, a Dick Smith store and a 'white box' solution provider who is moving 350 to 500 units a month. That's business we're not getting at the moment.

"We will drive business to the Compaq brand. What we're trying to do is increase the pie."

Penman said the Compaq store and internet sales moves were part of Compaq's overall e-business strategy that involved four key strands:

* Outsourcing Web site hosting to Compaq-run data centres;* Providing mission-critical systems for entrepreneurial "aggregators" that sell their services into small to medium enterprises;* Generating new revenue sources by "selling" hot keys on Compaq consumer PCs that drive traffic towards specific Web portals, and* Exploring collaborative opportunities with CMGI, a Compaq-related company, which owns a range of attractive internet "properties".

Compaq has offered its resellers the olive branch of buying franchises for company-branded stores if its current direct sales trial is successful.

Penman said the planned opening of five Compaq stores in Melbourne and three in Brisbane was a "pilot" program for company stores.

"This is a test involving very small stores, less than 100 square metres, which are not going to compete with a megastore," he said.

"Eventually we will involve our partners by letting them buy a franchise in these stores, but we want to play with our money first."

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