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Compaq ups online assault with Egghead.com deal

The move continues the retail push of one of Compaq's most successful divisions, as it pioneers the dual direct and dealer sales model the company hopes to migrate throughout its operations.

Compaq Computer stepped up the presence of its Presario PC line today by authorizing online retailer Egghead.com to sell its consumer systems and notebooks.

The move continues the retail assault of one of Compaq's most successful divisions, as it pioneers the dual direct and dealer sales model the company hopes to migrate throughout its operations.

Compaq's consumer division also is shifting more to a configure-to-order model similar to that offered by rival Dell Computer, but the system will be available through nearly 10,000 retail locations as well as direct from the manufacturer.

Egghead, which joins online retailers CDW, PC Connection, and others, will also service the Compaq systems it sells.

The Internet increasingly plays an important role in Compaq?s retail strategy, both direct from its At Home Web site and through online retailers. But companies like Egghead sell fixed systems, while the Compaq At Home Web site configures systems to desired specifications.

Just last week, Compaq's new CEO Michael Capellas said the company would move from 15 to 25 percent direct sales by the end of the year and eventually reach about 40 percent. While that is a far cry from Dell, Compaq is betting on a hybrid direct and dealer strategy it believes will give it the edge in the market place. The consumer market is Compaq's testing ground.

Compaq launched its "Built For You" program in June of last year following a pilot that started in February. Consumers could buy systems direct over the phone or Web and later through interactive kiosks located in 7,000 retail stores, such as CompUSA and Radio Shack. The number of retail outlets jumped to over 9,300 in the second quarter.

Compaq would not give specific details about its direct and indirect configure-to-order sales, citing a June company reorganization as the reason. The Houston-based PC maker expects to break out those figures after the third quarter.

A Compaq spokesperson would say that at last record, the company had more than $1 million Web sales a day. By contrast, Dell's Internet sales average more than $12 million a day.

Bob Brewer, Compaq's director of sales and marketing for consumer direct and retail configure-to-order sales, said Compaq's consumer configure-to-order "was growing five fold year-over-year."

Brewer also acknowledged that Radio Shack accounted for more than two thirds of retail kiosks. But he dismissed the idea Radio Shack accounted for more sales than any other retailer did.

But Radio Shack remains a crucial partner in the retail space. In January 1998, Compaq booted IBM out of about 7,000 Radio Shack stores across America.

Radio Shack soon after started selling specially configured Presario PCs and also serviced Compaq systems. Radio Shack currently sells three Presario systems in its stores.