Pfeiffer to direct vendors: You're history
LAS VEGAS -- Painting a bullish picture of the company's prospects, Compaq Computer Corp.'s chief executive said Monday the computer maker has erased the advantages previously enjoyed by direct marketers.
In a keynote speech here at Comdex, Eckhard Pfeiffer said the channel will be an essential partner in Compaq's drive to dominate all aspects of the industry.
"The future is not direct versus indirect or Compaq versus Dell - well, maybe a little," Pfeiffer said. "The future belongs to whichever company provides the right bundle of products, technology, solutions, and services with the lowest cost of ownership to customers and the channel.
CNBC's Bruce Francis spars with Pfeiffer (AUDIO and VIDEO).
"Our new Optimal Distribution (direct) model destroys the direct vendors' price advantage. Our customers can order by telephone or over the Internet, or they can deal with resellers and VARs to get solutions and multivendor support. Michael Dell and Ted Waitt do not have the total answers."
Pfeiffer said that while PCs must become simpler to own and operate -- "more appliance-like" -- PC architecture will be ubiquitous. He vowed that Compaq will become one of the top IT vendors in the next five years and said PCs will "totally displace" legacy systems. Compaq and Intel will also continue their push into the small- and medium-sized business market.
Pfeiffer said the PC will become the ubiquitous communications device, and made a joking reference to Java. Compaq this morning introduced a PC companion running Windows CE 2.0.
Pfeiffer said the small business and home markets will converge, with homes having a PC server in the basement.
"Get ready to fasten your seatbelt. In the living room, you'll have a big screen with Web and TV access. The kitchen will have a device for audio and video conferencing and electronic commerce, and a device that handles E-mail and faxes. There will be devices for wireless video conferencing and for updating information from the Web."
Pfeiffer said PC users lack bandwidth, and will need to access data and full-motion, full-streaming video in both homes and offices. He predicted the PC industry will agree to a single digital subscriber standard, and said the cable industry in turn will provide new high-frequency subscription capability that will include the Internet, voice, and video.
Cars will also become digital, Pfeiffer said, and will include E-mail, Web access, and traffic monitoring capabilities run by voice.
Pfeiffer said consolidation will drive Compaq's growth. He said the top four PC vendors have gained 10 percent market share in the last 18 months, and predicted they will own 70 percent of the worldwide PC market in five years.
"Most consolidation is driven by customer experience. They want access to products and services at any time, they have a broader definition of value, they emphasize brand and quality, they want to simplify shopping and owning, and they want to know we will be there now and over the long term. PC companies who can best meet their total buying experience will win."
Compaq demonstrated a test device with a big screen that combines Web access, home shopping, and television. But as a warning to the industry, Pfeiffer also ran an ad for the Compaq Buzzpro, a device that "translates buzz words with the push of a button."