Dealers Face Threat From Suppliers.

Europe_s largest dealers face a serious threat from an unlikely quarter - their main suppliers. The inexorable rise of Dell, which today has a stock market value twice that of Compaq, is forcing IBM, Compaq and Hewlett-Packard to consider direct sales yet again. IBM and Compaq in particular have come out with direct initiatives designed to wow US investors. Europe_s smallest dealers face a much more obvious threat. Dealers are resigned to the fact that vendors are going to sell direct. As long as they are left with a seat at the table many claim they don_t care. That sounds fine, but, in practice, most large dealers in Europe are still making well over half their profits from product reselling, which still accounts for over 80% of their sales on average. On the face of it, this is a real threat. Hewlett-Packard has a systems integration arm with sales of over $1 billion a year. Thanks to Digital, Compaq_s customer service arm is $2 billion strong in Europe. IBM_s systems integration and outsourcing business is a $10 billion business in Europe. But in practice, the big dealers claim to be relaxed about this. They argue that these operations are generally high-end consulting and lack the prosaic volume desktop skills needed to cope with, say, a weekend roll out for a bank with a thousand branches.