Shifts at Compaq may push down prices for PCs

Article Abstract:

Top PC maker Compaq is planning changes in its distribution strategy, including a move to some direct shipping, that will lead to price reductions by as much as 10%. Noting the success of direct sellers Dell Computer and Gateway 2000, Compaq plans to assemble computers for business customers when they are ordered, not according to market projections, and to ship some models directly, reducing its dependence on the reseller channel. Compaq hopes the new strategy will help it reach a goal of $40 billion in sales by the year 2000, which requires that Compaq sales, at $18.1 billion in 1996, grow over 33% annually. Compaq hopes to match the speed and efficiency of Dell and Gateway, whose sales rose 45% and 36% respectively in 1996, compared to Compaq's 30%. Dell and Gateway build a system to order and ship it within two to three days. Compaq may be risking its strong relationship with the channel by direct shipments and has yet to work out details of the plan to allow resellers final assembly.

Prices and rates, Distribution, Company pricing policy, Company Distribution Practices

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Compaq plans to eliminate 5,000 jobs in its first cut after Digital purchase

Article Abstract:

Compaq announced that it would eliminate 5,000 manufacturing positions as part of its strategy following the acquisition of DEC. The reductions include 1,000 at Compaq's PC circuit-board unit in Houston, the main North American facility that produces circuit boards for desktop PCs. Other key moves call for shuttering its 600-member manufacturing headquarters in Marlboro, MA, and cutting 800 positions at a DEC plant in Kanata, Ontario. Compaq anticipates taking a special charge of $1.5 billion to $2 billion in the 2nd qtr 1998 to account for the DEC-related cuts, as well as another charge to cover streamlining costs. Compaq acquired DEC and its 53,500-member workforce earlier in Jun 1998 for $9.1 billion. A Compaq official said collapsing most of DEC's international factories into Compaq's will result in the most efficient scenario.

Human resource management, Company personnel management

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Compaq unveils 2 PCs for Under $1,000

Article Abstract:

Compaq is adding two new PCs priced under $1000 to its fall line up, hoping to have high sales in the back-to-school and holiday market. The machines are priced at $999 and $799 but do not include a monitor, which typically runs an additional $200. The $799 machine has a 180MHz chip from Cyrix and the $999 machine has a 200MHz chip from Intel. Approximately 40% of PCs for under $1000 are sold to first time buyers who could not previously afford a computer. Compaq is also unveiling five notebooks and five new desktop models during the second half of 1997, in the hopes of bypassing Packard Bell with the top PC sales in the US to retailers. By introducing its fall line up before Packard Bell, Compaq was able to out sell the company by 4,500 PCs.

Analog Computers, Planning, Product information, X86 processors, Company product planning, Pentium-based system, Pentium based computers

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