In light of moves by Compaq to set up retail stores, those who've been in the game as long as Don Bastian, proprietor of reseller Best Software and Computers, are left scratching their heads. Bastian has his say here.
Firstly, let me say we expect to survive whatever Compaq does, as will my fellow retailers who are experienced and battle hardened.
In the early '80s, IBM entered the PC market, about three or four years after the pioneers. IBM flirted with vertical integration, opening or sponsoring an "IBM" shop in Pitt Street, Sydney. The staff wore pinstripe suits, and really looked successful. The shop lost money and IBM didn't follow through with that model.
Compaq entered the market in the mid '80s. At that time, IBM and Compaq flirted with direct sales. They later switched back to the channel model.
In the '90s, DEC and Apple have tried opening or sponsoring their own stores. History shows they haven't really worked. So why are Compaq considering this?
Perhaps it's the old motivation: market share isn't up to head office expectations, we'll control the outlets, push our own product and grab the huge retailer slice of the transaction!
This is simple armchair logic, totally divorced from any knowledge of the realities of shopfront retail. Probably based on a few spreadsheet expectations?
Another possibility is that head office might want to try the new model down here in Australia - not so embarrassing if it folds. People in suits just don't react fast enough, that's why I tossed mine out in the '70s.
Then we have the entrance of the Internet. Dell has become much more aggressive in the last few months, and took our biggest customer off to the US to show off their organisation. We lost the client. Perhaps we should have offered a cab trip to our Chatswood shop?
In summary. We are increasingly losing software sales to indirect manufacturer-to-user models. Seven years ago Microsoft product returned 65 per cent of my revenue. I don't bother to stock it these days.
The Internet is taking sales from retailers across the board. Superstores have attacked the home user/SOHO market. Dell, Gateway and larger Internet sites have attacked the top end of our market. The zero dollar PC is attacking our home market.
So why would Compaq enter into retail shops, and what are their prospects?
Well, what approach are they going to use? Adopt hardened shop owners or go the show pony road with their own model and suits?
Perhaps if they snapped up someone like Tony Gattari and used experienced shops/retailers, they might make it work. But they will be competing with their own traditional channels.
Have your say. E-mail Retail Section editor Gerard Norsa at email@example.com