The merged HP and Compaq will have to make radical changes to the
way it sells PCs if the company is to remain competitive, perhaps
paving the way to an improved pricing model for users.
The HP/Compaq merger, largely driven by the recent decline in PC
demand which has come about as a result of the economic slowdown
and structural problems with the broader IT market, points to
inadequacies in the way PCs are sold.
Martin Hingley, the vice-president of the European systems group at
International Data Corporation, said: "The power of the PC exceeds
the power of operating systems and application software." The
result, he said, was that users were less compelled to frequently
upgrade to keep pace with technological advances.
Hingley said much of the functionality being built into new PCs has
been affected by the lack of broadband technology. "Users need fast
PCs to synchronise the video and sound that will appear when
broadband takes off," he said.
One way to overcome the backlash plaguing the PC industry, Hingley
suggested, is for the merged HP and Compaq to adopt a
subscription-based pricing model. "European and Japanese businesses
understand subscription-based pricing," he said.
Hingley pointed out that mobile telecoms firms recoup costs through
mobile phone subscriptions, and that such a model could be applied
to the PC market. But, he said, "subscription-based pricing is not
well understood in the US".