Central American Resellers Lower Compaq's Grades

MIAMI (07/26/2000) - Resellers in Central America and the Caribbean can't get no satisfaction as far as support from PC vendors is concerned.

Resellers in that part of Latin America were less satisfied in 1999 than in 1998 in five key support areas -- logistics, sales, commercial terms, marketing and support -- according to an International Data Corp. (IDC) study.

Compaq Computer Corp., which leads Latin America's PC market, had the dubious distinction of seeing its satisfaction levels drop in all five categories, a result of the vendor's adoption of a direct-sales model to complement its channel business, said Andrew Newman, research manager of emerging markets at IDC's Latin America division in Miami, during a briefing on Tuesday.

Despite the drop in reseller satisfaction, Compaq still ended up as market share leader in units shipped in Central America and the Caribbean, in part because its emphasis on direct sales is real and already yielding results, Newman said during the briefing titled "Emerging Market PCs: Central America and the Caribbean."

Compaq had traditionally used an indirect sales model globally -- that is, not selling directly to customers but rather selling to resellers -- but, as part of a corporate strategy shift last year, it implemented a direct-sales infrastructure. The idea is to give its clients the option of buying products directly from Compaq, the company has said.

"Compaq continues to dominate in Central America and the Caribbean, but there are questions on channel policy that are still unclear with resellers," Newman said. For example, Compaq got the thumbs down in commercial support for watering down its price-protection policy for resellers, he said.

Few PC vendors have offices in Central America and the Caribbean, which heightens the importance of resellers in those markets. Overall, resellers were most dissatisfied with vendors' marketing support, which fell 10 percent from 1998 to 1999 in IDC's satisfaction gauge, Newman said. At the same time, marketing support was the area that most gained in importance, with a 7 percent increase, Newman said.

"Image matters more than ever. It's not an area that should be neglected," because resellers count on a brand's image as a differentiator to pump up sales, he said.

Vendors got the thumbs down in marketing support across the board, except for Hewlett-Packard Co., which excelled in this area, Newman said. HP also got high marks in commercial support, Newman said. In sales support, Apple Computer Inc. did a good job in 1999 with the resellers, he said.

IDC measures satisfaction and importance by asking resellers to rate on a scale of one to 10 the vendors' technical, sales, marketing, logistics and commercial support. On average, satisfaction dropped and importance rose in all five areas, which means that vendors must improve their overall channel support in Central America and the Caribbean.

Of the study's five key markets, Puerto Rico experienced the highest growth in units shipped. This Caribbean island, a U.S. territory, saw its shipments jump 32.3 percent to 140,000 units in 1999, compared with 1998. Puerto Rico is also the largest PC market in the Caribbean and Central America. It was followed by the Dominican Republic with 20.7 percent shipment growth, Guatemala (15.1 percent), Panama (13.3 percent) and Costa Rica (10.5 percent).

Prices, however, dropped throughout the region because brand-name vendors from outside the region, such as Compaq, IBM Corp. and HP are trying to fend off the advances of local assemblers, whose machines are often called "clones," Newman said.

IDC surveyed about 150 resellers for the study.

IDC is a unit of International Data Group, the parent company of the IDG News Service.

IDC's Latin America research unit is at +1-305-267-2616 or at http://www.idc.com/idcla/.

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