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Analysis: Compaq, IBM squirm between devil and deep blue sea

Dell is the devil and dealers are directly in the deep

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Four years ago, next January, The Register found itself in San Diego along with thousands of other business partners (BPs) to hear the word of CEO Lou Gerstner about how committed it was to its channel. Two years later, we found ourselves in the company of Compaq luminary Eckhard Pfeiffer at Innovate in Houston, to hear the great man pledge his company's commitment to the channel. And now we find both IBM and Compaq still maintaining that they are committed to the channel, while effectively dumping their grand plans. It was not much of a surprise for IBM to do a u-turn. It is characteristic of the protean nature of the beast. A proteus is now considered to be a blind, cave dwelling amphibian but its original meaning is releated to Proteus, a Greek sea god, who did not want to foretell the future and therefore took on many different forms. Both definitions apply to IBM. It has wriggled its way, seemingly blindly, through many a similar situation within living memory. But surely Gerstner's latest wriggle is one too many. The cost of promoting IBM's two tier channel scam is incalculable -- a little like its profound failure with OS/2. So when Doug LeGrande, IBM EMEA's general manager, told The Register two weeks ago that his European channel weren't particularly concerned about the company's move to a direct model, that's probably because they already knew… Compaq is a little different. It has always had a better relationship with the PC channel than IBM, and seems to have gone out of its way to attempt to keep the relationship going. But the devil, in the shape of Dellistopheles, Great Satan of Hardware, concentrates PC manufacturers' minds. It has not suffered from the inventory problems of both Dell and IBM. On the contrary, it has stormed through 1998 and will probably do the same next year. Compaq seems to have been forced into its direct action by Dell's success on price and time to delivery. IBM's excuse, at best, is sheer incompetence. IBM shareholders should ask the company they invest in exactly what it thinks it is doing. After all, it invented the PC which spawned all of its competition. But now that both Compaq and IBM have bitten the direct bullet, there is another question that their shareholders should put to them. Why are both Compaq and IBM being so mealy mouthed about going direct and why don't they both just come out and say their enemy is Dellistopheles? ®

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