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Can Compaq / Digital get out of jail and manage their way out of the hole that they have fallen into?
Is Compaq suffering from Digitalis poisoning?
Trying
to swallow Digital and survive plummeting sales is causing more than just
indigestion pains.
Compaq is facing
a deluge of court actions from shareholders
accusing the company of violating federal securities law and "defrauding"
public investors.
It would seem that eleven Compaq executives, with much foresight, sold
shares worth ca. £30M just before the slowdown of PC sales became
public knowledge. The revelation caused the share price to plunge from
£29 to £19 in a couple of days (> 30%).
This, on top of the struggle to absorb Digital into the Compaq world,
the loss of direction and identity crisis, cannot bode well.
How can the company respond. Leveraging its product and service quality,
it can try to rediscover itself or it can enter into desperate. measures
like cut-price PCs and cut-price UNIX boxes. Which one of these directions
will retain the long-term corporate customers?
Compaq / Digital have the means to get out of this hole. They have solid
products, they have a good pedigree, they have a good name. So what is
the problem?
Management is the problem. They do not know what they are. They are no
longer box shifters. They are solution providers. This means that they
have to start thinking about value and not just cost. This requires a
totally different understanding of the customers requirements. This requires
getting into the customer environments and understanding how a Compaq
/ Digital solution (existing or new) would help the customer. This requires
moving away from a price book mentality. This requires getting away from
the - "I have a solution what is your problem" - sales strategy.
This requires a change from the "bigger, faster, box" syndrome.
If Compaq / Digital want to remain box-shifters they are doomed. There
are better boxes, there are faster suppliers, and there are cheaper
options. Adding value through integrated solutions is the way forward.
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