Compaq Buys Into Custom Configuration

Compaq Computer Corp. hopes its acquisition of Inacom Corp.'s custom configuration and order management capabilities will help it beef up its direct-sales drive. Some analysts said they're doubtful.

"What Compaq is doing is mixing and matching capabilities from two companies and trying to piece them together," said Roger Kay, a research director at International Data Corp. in Framingham, Mass. Dell Computer Corp., by contrast, grew its direct capabilities organically, said Kay.

Eric Klein, an analyst at The Yankee Group in Boston, is more optimistic.

"Compaq had a long-standing relationship with Inacom [so] I don't think it will take them long to piece this together," said Klein. He said he believes this move is an important step for Compaq toward catching up with Dell in the direct arena.

Compaq said last week it will pay $370 million in cash for the Inacom activities, which it will integrate into a wholly owned subsidiary under the direction of Mike Winkler, senior vice president and group general manager of commercial personal computing at Compaq.

In a conference call last week, Compaq President and CEO Michael Capellas said the deal would have its most immediate effect on the company's largest accounts, which prefer a direct relationship with the vendor. He said Compaq would maintain a strong relationship with channel partners and suggested that resellers would actually benefit because product supplies would be more predictable and inventories would be lower.

Compaq executives repeated earlier statements that the company intends to reach 40% direct sales in the U.S. by the end of this year.

The Inacom deal will allow Compaq to deliver more complex preconfigured systems than its biggest competitor, Dell, said Charles Smulders, an analyst at Gartner Group Inc.'s Dataquest in San Jose. However, "there's very little evidence in the industry that buying your reseller is a sound strategy," said Smulders, adding that the acquisition would likely upset other Compaq resellers.

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