Compaq buys distributor's custom-configuration business

Compaq is beefing up its direct-sales capabilities with the acquisition of the custom configuration and order management activities of Inacom, a longtime Compaq distributor.

Compaq will pay $US370 million in cash for the Inacom activities, which it will integrate into a wholly owned subsidiary that will report to Compaq's Mike Winkler, senior vice president and group general manager of commercial personal computing.

The acquisition, which had been rumored, was announced yesterday. Compaq president and CEO Michael Capellas said the deal would have its most immediate effect on the company's dealings with global accounts.

He said Compaq would maintain a strong relationship with channel partners and suggested that resellers would actually benefit because of more predictable product supplies and lower inventories.

Compaq executives repeated earlier statements that the company intends to reach 40 per cent direct sales in the US by the end of this year.

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