ARN: What do you see as being the great opportunities and challenges facing Compaq as you take the reins?
Brandling: Our opportunities and challenges are in some way the same thing, and that is anticipating what is going to happen in the market in the future so we can be proactive rather than reactive.
Compaq's vision statement is "Every-thing the Internet". Today that means all the things we understand about personal uses. In the future, when we see broadband and wireless come together, we are then into the pervasive information era and that creates a whole range of potentially different dynamics and new business methodologies.
We want to understand and anticipate those changes, and work with our partners to make sure we are well positioned with solutions ahead of the pack and not chasing it.
How well do you know the Australian channel and how important do you see it in the overall Compaq picture?
The philosophy I want to drive is that we can't go it alone. We need an inclusive [channel] program to map out what value is being added and how we can best utilise that value to mutual benefit. Channel partners are facing the same challenges and opportunities as vendors. Those who can differentiate, adapt and focus will shine, while those who rely on just shifting boxes cannot survive.
For channels, it comes down to the same principle and that is understanding what their real core competencies are and where they can add value, not only for today, but in the way they shape their business for tomorrow.
There are two key elements to this. One is the ability of all organisations to partner. Secondly, they should be really crisp about what they want their business to be good at in the value proposition equation. That is their opportunity and their challenge.
At different points in the last seven or eight years, the question of the channel's future has come up. I would go back to principles here and say I think there is a very strong role for the channel participating in a much bigger pie in the future.
The exact shape of that is yet to be determined. It continues to evolve very quickly. What organisations have to do is understand what value they bring, and keep in mind that the value they bring today may be different to the value they bring tomorrow.
Any organisation that is purely dependent on making a pass-through margin on dropping a box has a business model for the future.
What is Compaq doing to arrest slowing PC growth?
There is a complex series of dynamics going on in the global market place affecting volume product business, whether they be desktops or portables. Compaq is in a very fortunate position where business for us continues to grow.
In a commercial sense, we are seeing some currency pressures in Europe and a slowing of technology growth in general. In a technology sense, we are seeing handhelds and other devices introducing a new generation of technology.
If you look locally in Australia, we have had everything this year - currency, Y2K, the Olympics, GST - but if you look at our [Q3 financial] results, we did very well.
Despite some of the softness around the commercial systems market conditions, [Compaq A/NZ's] Q3 revenue was up 16 per cent over the same time last year and our volume shipped was up 19 per cent. In the consumer sense, our PC revenue growth locally was up 55 per cent and volume shipped 7 per cent.
While it is not true to say Compaq's business is feeling any pressure, to take that to the next level I think that we are at an interesting point in the development of the next generation of technology. We have already seen that with the introduction of the iPaq device. There is the secure wireless Internet generation that is coming and some of that will obviously overlap traditional volume PCs, but the business for us is buoyant at the moment.
What is the current state of play with the Compaq Connect stores? The first one was opened in Sydney last month, where is the widespread rollout at?
The initial eight stores were launched in 1999 to try and prove the concept that we could reach new markets not being serviced by our existing reseller channels. We put a very high standard of service in a local environment with Com-paq product and monitored whether it was viable.
We believe the last year has told us the concept is viable. Some stores have worked better than others, but we are now at the stage where we have started rolling out franchises. The initial indications of this next step are good but it is still too early to tell.
The overall strategy is to expand that franchise end network to expand our overall market penetration. The key is all about embracing the small and medium enterprise market that we are not currently getting at and embracing new partners.
What is the delay in expanding the network if the initiative is working?
The philosophy we have adopted is exciting moving forward. But we really only have one chance to do it right, so we have been very careful about proving the concept and then refining it as we go along.
There is a lot of enthusiasm [from potential franchisees] out there, but I would like to see it as being steady, gradual growth that is successful, rather than just opening the floodgates and potentially having it fall over.
It is a very fine line to balance velocity against quality of execution, and what we are trying to do is make sure we have that balance right. As the quality of execution pays off, I would envisage there will be some acceleration of the rollout.
One of the things your predecessor said he was not going to miss was the quarterly reporting. How are you going to cope under the current exchange rate volatility?
The rapid decline of the Australian dollar has given us and the wider community some challenges. We have to look at how to manage that and use it to our advantage.
We have a large manufacturing facility in Sydney which will be expanded and we will be building more systems locally. There are also the application development sectors, where we have fantastic skillsets - we can leverage the currency to invest in the local customer base as well as cost-effectively export those applications to global markets.
We have to watch the situation day by day because it is so volatile.