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Compaq set up a soup kitchen today at the Las Vegas Hilton Theatre. Unsure of CEO Eckhard Pfeiffer’s Keynote speech pulling power, the Texas computer giant bribed attendees with free lunch boxes. Only, as Pfeiffer said himself, there is no such thing as a free lunch… delegates had to sit through his speech first. Self-deprecation is clearly the order of the day with corporate speechwriters. But the speech was short -- half an hour tops -- and the auditorium was packed. Pfeiffer could be accused of having a charisma by-pass. But he carries himself well. Tall and tanned, he looks like a patrician US senator and -- except for a hint of a German accent -- sounds like one. His Comdex Keynote was all about…Compaq. Pfeiffer is the George Bush of the computer industry -- he is uncomfortable with the Vision Thing. Barring calls for the computer industry to “soften the hard edges of technology” and to get a sense of humour (accompanied by the laughable assertion that Compaq does not take itself too seriously), he refrained from making sweeping statements. Mercifully, he also avoided talking about warehouses, his favourite subject. Pfeiffer’s sub-theme of the day of the day was equally clear –- it can be summed up in the unspoken phrase: “We’re better than Dell”. Compaq’s move to sell direct into the small and medium business market, announced last week, was not playing copycat to Dell and Gateway, but a superior hybrid channel model, he said. The value proposition for the new Prosignia SMB lines sold direct was “superior to anything our competitors have to offer,” Pfeiffer claimed. Selling direct makes good sense in the SMB sector, where Compaq’s market share is weakest. On the consumer and small business side, in the US and Europe, the company has a call-centre infrastructure to handle small businesses and consumers directly. It will be interesting to see what happens when Compaq’s Customer Choice extends upmarket into the corporate and enterprise sectors. As part of the company’s new Customer Choice regime, Compaq will sell products “the way (the customers) want, where they want and when they want,” Pfeiffer proclaimed. This is exactly the same phrase deployed by Howard Ford, one-time head of the IBM PC Company, in the early 90s when he explain IBM’s move to sell PCs direct into the consumer and small business space. IBM dropped the scheme within months, on the grounds that sales never accounted for more than three per cent of business, and serious corporate resellers defected to -- you guessed it -- Compaq. Hewlett-Packard and IBM will pounce on any reseller fall-out. There will certainly be tears among corporate resellers, as they watch their biggest customer’s switch over to Compaq. Historically, the most channel-friendly of PC vendors, Compaq has calculated that it can afford to take this risk. With Digital and Tandem’s direct sales and technical team under its wing, Compaq now operates a professional services organization of 29,000 employees. The company also has a rich enterprise product portfolio, with a technology strategy centered around Windows NT, Unix, 64-bit computing, storage and the Internet, according to the Pfeiffer pitch. For some reason, he made no mention of networking hardware, an area where Compaq has stated its ambitions to reach number three in the market. Short of buying 3Com -- or Cabletron plus at least one other -- reaching that target is now an impossibility. But let’s not forget Compaq’s intentions in the consumer market space where --- according to Pfeiffer –- it is the world’s biggest player. Announcing two new Internet broadband desktop PCs for the American home market, Pfeiffer stressed once again the company’s determination to gain/retain leadership on price/performance. Is this leading to a price war, we wonder? At the Keynote, he announced the company’s treble play, broad band internet program, enlisting cable, satellite and DSL companies to supply access alongside the new PCs. “Our goal is to be the preferred supplier for the networked, digital home,” Pfeiffer said. Now that is a big theme. Unfortunately, we’ll just have to wait for next year's Comdex Keynote, to find out how Compaq intends to get there.®

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