Compaq Computer filled another gap in its e-commerce strategy by signing a
strategic agreement with software distributor Beyond.com to provide
software and support services over the Internet.
In a non-exclusive deal, Beyond.com will operate a co-branded Web site for
Compaq which will offer and distribute software to developers, consultants,
and systems integrators in the Compaq Solutions Alliance Program.
Eventually, Beyond.com will provide software downloading services
for the Compaq.com site, which serves both corporate and consumer
"The big trend in software is digital downloading. Users can click and
download to their computer," said Mark Breier, president and CEO of
Beyond.com. Brier cites figures from Jupiter
Communications forecasting that 35 percent of all software will be sold
and electronically downloaded by 2002.
While Beyond.com is hoping to capitalize on that emerging trend, Compaq's
larger mission is to create a walled garden of services and products that
will create ongoing revenue streams to offset ever-decreasing PC prices.
PC companies can't compete just on price anymore, said Tony Amico, director
of PC channels research at International Data
Corporation; they have to offer "value-added services." Amico made his
remarks at IDC's Directions 99 conference in San Francisco today.
Compaq hopes to stay linked to customers through an e-commerce strategy
which includes the AltaVista search
engine, the acquisition of the
Shopping.com site which sells all
manner of goods, and efforts to sell more of its computers directly to
Delivering software digitally to customers is another vital link in the
chain, because Compaq can capture a slice of the revenue that normally goes
out to retailers and resellers after the hardware sale. But as it moves to
increase its Internet presence, Compaq has to be careful not to step on the
toes of its current distribution partners.
"Everybody's rolling out e-commerce bells and whistles these days," said Jack
Staff, chief economist at Zona
Research. But what will be important to keep an eye on, he
said, is how Compaq manages relationships with its current distribution
partners such as retailers, consultants, and various other business
Already there are signs that those relationships are strained. Last
week, Compaq temporarily suspended sales authorization to several online-only purveyors of
Presario consumer PCs as it figures out how to manage conflicts between low margin "brick and mortar" retailers and lower margin online resellers.
Another problem for traditional retailers and resellers is that Compaq
isn't the only PC maker gathering items for a customer's shopping
cart. Dell Computer is set to announce
its own online superstore, called "Gigabuys.com," and just last week,
Gateway purchased a stake in the online division of NECX, a Massachusetts-based reseller of PC
equipment and software. HP has also said it will expand its online PC sales.
"The villain is not Michael Dell, it's the Internet," Amico said in
reference to the CEO of Dell Computer, which has honed the direct sales
model to drive tremendous sales growth at his company.