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EDITORIAL: Compaq sees red

EDITORIAL: Compaq sees red

You've got to admire Compaq's tenacity. Time and again, it makes decisions that prompt widespread scrutiny, anger and frustration in the channel.

Sure, we all know the world is changing, that traditional distributors and resellers can never be the same. And to try and understand Compaq, maybe it's still a case of "someone had to do it".

But in this, our final issue of the year, Compaq's again in the limelight after Leading Edge CEO Keith Lane sprayed the company for attempting to draw members of his buying group into the Compaq Connect scheme.

And fair enough too. The strength of a company like Leading Edge is the loyalty of so many store managers around the country. Joining Compaq must be something akin to heresy for Leading Edge. You can imagine how Lane felt when his Castle Hill store became Compaq's first Compaq Connect store in Sydney.

But imagine the irony when, on the one hand, Compaq is trying to lure Leading Edge stores away from the fold (remembering they also sell the white-box PCs Compaq wants to destroy) and then Sweetwater coming along and offering the same stores cheap Compaq PCs and notebooks, on the other. It's messier than a dog's breakfast.

Speaking of Sweetwater and things controversial, what about the idea of a wholly owned Compaq distributor? Triforce's Abbas Aly and Sweetwater's Philip Tran gave me a very honest interview with the aim of clearing up a few misconceptions (see page 42). What's emerged is an interesting scenario where Compaq Australia could potentially repeat a huge mistake its US parent made with the purchase of distributor/aggregator Inacom. Sweetwater almost fits the same business model, but it remains to be seen if the scene will be replayed Downunder.

Again from the US side, Compaq's shares dipped 13 per cent on the Nasdaq last week when it came up $1 billion short in analyst expectations of its revenue for the fourth quarter, at a shade over $US11 billion, compared with the $10.4 billion from the previous year. It's a case of red faces all round.

Meanwhile, ARN's section editors have done it again this week with a great read next year for different segments of the channel in each of our news-based Solutions Sections. Jeanne-Vida Douglas, Agnes King and Gerard Norsa then tie it all together in our Lead Feature (page 39) on the channel's predictions for next year.

In my opinion, two themes stick out like sore thumbs: the looming Federal Election and further channel consolidation.

At the industry launch of our new monthly magazine Channel X last week, the opinion seemed to be that the election could totally change the IT industry (assuming of course, we don't copy the US and struggle to work out who won).

As for consolidation, it's been worrying to watch some of our apparently solid reseller friends shed staff over the last few weeks. IT&e, Logical, Praxa, Com Tech and Data#3 have all recently drawn their swords in order to lob some excess heads engaged in anticipation of dot-com business.

December and January are looking quiet in the channel, so it's anyone's guess as to exactly when corporate, government and SMB spending will take off again. In the meantime, there's still a few days of Christmas shopping left for retailers to cash in.

On behalf of the entire ARN and Channel X team, I'd like to wish you a sensational Christmas and New Year. We'll see you again with our January 24 issue when we pick up the bat for the channel again. Remember, it really will be the New Millenium this time.


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