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Compaq previews The Source portal – not many dead

You mark our words - the wheels'll fall off this one almost immediately...

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Compaq previewed the business-to-business portal it's calling The Source at a side event during the IDC European Forum in Monaco this week. The demo suggested that the service will be offered as a kind of dumbed-down yellow pages without any choice of potential suppliers, and it soon became clear that the real purpose is to "present an opportunity for Compaq to increase sales of its own solutions, hardware and services". Compaq's partner to develop the software is none other than Concert, that $7 billion start-up and global venture between AT&T and BT.

The Source is to be a Pan-EMEA initiative that Compaq says is "designed to help businesses grow by bringing together relevant, high quality, local online services", but it emerged during discussions with Compaq executives that the real purpose is to target businesses and encourage them to buy Compaq kit - sweetened by an offer of financing (and curiously, without prompting, Compaq volunteered that it would not be going so far as to enter the venture capital business). Compaq admitted it would be using what it calls an electronic customer relationship management programme - so that users can be bombarded with targeted pitches, "specific to their business needs" of course.

It's not unusual for a big company to misunderstand what smaller companies might want, and it's clear enough that despite all the money that Compaq has spent on "significant market research" for The Source, it hasn't really got a clue about the real content needs of SMBs (small and medium-sized businesses).

It is hard to see how Compaq could even cover costs from the portal service alone. The plan is said to be to "share revenue" with online service partners, to get profits from the sale of third party solutions by the online services, and through "a range of traffic generation initiatives".

Compaq SVP for sales and services Peter Blackmore pointed out that what Compaq brought to the party was a well-known brand name (and "global strength and expertise in Internet solutions" apparently). But there is a big leap when Compaq sets itself up as an expert arbiter to choose the services to be included, and not to offer competing services on the portal. This would of course make it easier for Compaq to charge potential content providers a premium, but would appear to conflict with the needs of businesses for the best deal from a number of suppliers. Blackmore suggested Compaq would "make money" in Q4 with the service. It doesn't seem like good news for Compaq resellers.

There is an underlying assumption by Compaq that SMBs/SMEs lack the time to look around for information, but the evidence in fact points the other way. Compaq's claim that it "knows exactly what types of services growing businesses need" must therefore be regarded with some cynicism. The content of The Source, which is about to be launched in the UK (followed by Finland in October and EMEA generally over the next year) does not have the kind of "resources appropriate" to the intended users, judging by what's at present on offer at www.thesource.compaq.co.uk/portal. It's an initiative that will not be rolled out in the US, because there will be "other initiatives" there; these were not specified.

It is intended to offer the service for PCs, PDAs, and WAP phones but the WAP demo was not at all convincing. There was no demo on a Palm, but there was one on Compaq's pocket PC device.

We asked whether Compaq had any intellectual property rights for the name "The Source" - especially as there was an internationally-acclaimed service known as The Source some years ago - but we were astonished to be told that Compaq had done nothing about trademarks, service marks or even registering websites to protect the name. A little research soon showed that there are already too many other services using the same or similar names for Compaq to be able to get much IP protection. One of them told The Register it would "get the legal department to look into it" when it heard that Compaq was planning to call the service The Source, as it had a registered trademark for "Source" in the telecom sector. Another service - thesource.co.uk, a network of designers - could well be concerned, and it does have demonstrable prior use of the name.

The fuzziness of Compaq's business plan for the service, apparent ignorance of the failure of similar previous efforts, and the failure to consider IP issues points to The Source looking like a very hastily cobbled-together initiative. ®

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