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Compaq to launch e-commerce line

The company will announce a fleet of hardware and software, providing products or services to all parties in the e-commerce buying chain.

Compaq will enter the electronic commerce arena in a big way next week when the company announces a fleet of hardware and software that range all the way from desktops optimized for electronic retailing to enterprise payment and security systems targeted at banks and Internet Service Providers (ISPs).

The effort is, if anything, far ranging. Compaq will be providing products or services to all parties in the electronic commerce buying chain, said George Favalaro, director of business strategy in the company's Internet division.

At one end of the spectrum, Compaq will release a desktop bundled with an e-commerce suite from Inex. Next up the ladder, Compaq will be offering specially configured ProLiant servers with Microsoft's commerce server as well as firewall software from Raptor.

For institutions, the company will release the "iTP Certificate Solution"--a collection of enterprise applications designed to handle large volumes of secure transactions. Built in conjunction with its Tandem division, these applications, which will sell for several thousand dollars, will be sold separately or with high-end servers to financial institutions.

Compaq is also lining up resellers, system integrators, and ISPs to sell and install these products. In addition, Compaq will open the ClubWeb Internet Community, an online informational site for consumers and business partners.

"This is a classic Compaq approach. We are leveraging the leaders in the industry and we are leveraging our channel," Favaloro said. "This is our first set of solutions for the e-commerce marketplace."

The e-commerce strategy also seemingly provides a way around the price wars that have ravaged hardware vendors. Compaq, among other computer makers, has seen margins shrink drastically on desktops and servers in the past year due to price competition. In turn, these companies have turned to a volume sales strategy to sustain profitability, which has led to bloated inventories and further price cuts.

While product bundling cannot insure a company from price competition, it can provide some insurance because greater differences and capabilities exist between the product offerings of the various vendors.

While Favaloro stated that these products were not designed to recapture margins, he acknowledged that they will be more expensive than their stripped-down counterparts.

The ProLiant e-commerce servers, for instance, come in toward the top of the line for their product categories. Compaq is offering ProLiant 850R and 6500 servers configured for e-commerce. The 850R server will come with a 200-MHz Pentium Pro processor, 128MB of memory, and a 4.3GB hard drive, as well as a commerce suite from Microsoft. It will sell for $13,696. A base level 850R sells for around $3,000 and comes with only 32MB of memory.

The iTP package will provide Compaq with an opportunity to become a back-end provider for large corporations. Compaq acquired Tandem partly because the Tandem would give them admission to the "glass house" computer centers in major corporations. These solutions will do exactly that. Targeted at large financial institutions and telephone carriers, these iTP systems, which will handle payment, certification, and communication integration with customer support centers and other e-commerce functions, will cost several thousand even without the hardware and require integration and consulting services to install.

Compaq has not released pricing on its desktop e-commerce solution. The desktop solution, however, will work differently than the server bundles. With the desktop, merchants will configure a storefront and then hand over the management of the operation to an ISP, Favaloro said.