UPDATE: Harvey Norman dumps Compaq

In a move that will send shock waves throughout the entire IT retail channel, Harvey Norman today announced it has terminated its relationship with Compaq over the vendor's plans to open retail stores of its own.

The partnership was on target to achieve revenues of $97 million this financial year, according to John Slack-Smith, general manager of computers at HN.

The decision could spell disaster for Compaq's consumer systems business in Australia, as sources close to HN indicated that as much as 60 per cent of Presarios (Compaq's most popular consumer model) were sold through the retail juggernaut.

Negotiations between HN chairman Gerry Harvey and senior Compaq channel executives failed to find common ground so Harvey, true to his threat, showed Compaq the door over their plans to expand direct marketing activities through a call centre and online sales as well as retail stores. "That sort of marketing creates direct conflicts of interest with what we do as a retail business," Slack-Smith said. "They are no longer a business partner of ours, they are a competitor. Walking away from nearly $100 million in projected revenues this year is not something we have taken lightly, but given the nature of their business, we were left with no choice. Gerry was disappointed but as far as he was concerned there was no grey area here."

Slack-Smith said the ending of the Compaq supply opens opportunities for other global brands with IBM, HP and Packard Bell nominated as those most likely to step in to fill the vacant shoes. Local assemblers will also find more room to compete for punters at the 100 stores that are owned by Harvey Norman.

"Compaq is now a competitor, end of story," Slack-Smith said. "It is going to cause some serious soul searching by all retailers." Slack-Smith said he was unsure whether other retailers would follow the HN lead but doesn't understand how they can afford not to.

"How can any retailer afford to support its competitors," he said, before adding that there would be "a managed process for the closure of dealings with Compaq. All outstanding orders will be fulfilled and outstanding warranties honoured."

Compaq circulated a press release late yesterday commenting on HN's decision while still claiming its new distribution model was targeting new market segments for the company. It quoted Compaq MD Ian Penman's disappointment at the passing of what was "an excellent relationship".

"I would like to highlight the fact that Compaq has strong relationships with many other successful retailers which excel in providing quality products and services to consumers across Australia," Penman said.

"We will continue to work closely with these partners to ensure Compaq products are widely available."

Bobby. wrote on Dec 26^th, 2011 at 2:49pm:


Maybe cods can justify the HUGE price differential and this is not even comparing with an online seller !!

Everyone has woken up to their games which they have been playing for years  !!

And according to Hardly Normal the issue is all about a level playing field and ALL online buyers having to pay GST !! LOL

look I do not have a go at you for shopping on line..thats your business I just like to support my local business because I know they are there 24/7..and if I buy something to day I can return it tomorrow... that suits me I dont want to have to ring a courier or wait for the post office to open to return something thats wrong size doesnt work etc..

all I am saying is there is a reason for the price difference.. and unless you have been a retail owner we wouldnt know the half of it..

I went shopping to day at H.N. the shop was packed they were doing a roaring trade. so not everyone thinks like you thank goodness..I spent over $1000.
the staff were very kind and helpful spent a lot of time on us..got even more off the asking reduced prices.. and I am happy to so my bit keeping aussies in work..

you want to keep those employed overseas in work thats your business..I dont agree with you thats my business.. I dont have to justify anything to the likes of you... I find your behaviour very Un Australian and to think you wont be happy until this country is on its knees..I find pretty down right unpleasant

cods wrote on Dec 26^th, 2011 at 4:36pm:


Exactly so tell him to pull his head in and shut the bugger up about online sellers. Everyone is sick of hearing his pointless whinging. He will never be competitive no matter what taxes are slapped on online transactions   

Sir lastnail wrote on Dec 26^th, 2011 at 5:11pm:


Pull your head in Gerry..........how dare you try to make a quid, employ people, pay taxes and contribute to the Australian economy....

........oh and speak your mind.....disgraceful   

cods wrote on Dec 26^th, 2011 at 4:34pm:


In case you hadn't noticed that CPL is a shop here and does excellent business simply because they are competitive and give good service and advice not like the shops you shop at !!

Question to you is why isn't HN competitive and why should any government change the rules just because HN and the rest of greed incorporated can't be competitive ??

And you should shop till you drop at hardly normal because you need to satisfy the shareholders and landlords greed !! It's all for a good cause of course LOL

this is payback.