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HP/Compaq: Power to the user

The merged HP and Compaq will have to make radical changes to the way it sells PCs if the company is to remain competitive,...

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".

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