Argentina: Interview with Pablo De Lazzari
Pablo De Lazzari
General Director Of Compaq (N/A)
Q-1: Mr. De Lazzari, you gathered already important experience with such companies as Molinos Río de la Plata and Unilever. What would you consider your main achievement since you lead Compaq Argentina?
A-1: I think that my main achievement was to develop the company in Argentina. I joined the company in June 1997, we had a revenue a 50 million dollars , and last year we reached a 250 million dollars.
We are the second IT company in the world. We have to focus in our target in Argentina. Perhaps we have to penetrate the corporate market that is the segment where the investment in information technology does not depend on the economic situation of the country. There are 500 top companies in Argentina that depend on technology to be competitive in the international market. So at that time, we did not have presence in this market. We were just a high quality company and our competitors called us The box mover. So we started to create an organization focused on corporate services and on solutions. At the same time, Compaq was going worldwide in that direction. Today, Compaq is a totally different company than the one in 1997. Now we have the main customers of the country and we are present in the main government institutions.
Q-2: In order to improve your service to corporate clients, in particular small and medium sized companies, Compaq Argentina announced recently some significant changes. Can you tell us a little more about the reorganization of the company in Argentina?
A-2: When we decided to go directly to the corporate market we had a big problem with the channel. At that time, the channel thought that we were going to enter to their accounts and that we were going to take them all the work the have done. This was very difficult because we were trying to enter to the IT industry and there were lots of segments in other lines of businesses that we could not afford like discounts for the customers. So we were losing a lot of money. We reorganized the company just to reach the corporate accounts. We create a call center to attack small and medium businesses. Compaq readapt the company to continue working with the channel. This year we thought that there were a lot of accounts that we cannot attend directly because we have a limited structure with 250 people here. Now we are reorganizing the company to attack the top 500 accounts in the country and the rest is going to be served through the channel.
Q-3: What are your expectations concerning the market share in the corporate client segment?
A-3: Obviously we are going to gain market share. We are focused now in the profitability also. Compaq has worldwide 55% of its revenue in the professional services and the rest amount of the revenue is based in the high volume of products like PCs, Compaq Presario. The high volume businesses are having a very small margin. So it is becoming a risky business. In Argentina, we are trying to gain market share in the highest business and also we know that probably we are going to loose market share but not the leadership.. We are facing new companies in a lot of accounts and we need to act in that way because they need to buy market share. We do not need to buy market share but we need to control our leadership.
Q-4: For today, the number of PC users in Argentina is way below international average, which on the other hand side provides still a residential market with a huge growth potential. What is your approach to this market?
A-4: I think that PC penetration in the residential market is very low. We have a huge room to grow in the market segments, and we are launching very competitive and high quality products campaign with our competitors. Those families that have an important income prefer to buy a Compaq PC. Today, a lot of people find it difficult to buy a computer in Argentina. If Compaq does not put lower prices to some products like this one, probably we would have some problems to enter to the residential market.
Q-5: How much did the clone market impact on your businesses?
A-5: In the small and medium businesses and probably in the Soho/ clone market represents more than the 65%.
Q-6: Do you expect more support from the government to attack the black market that sells clone products?
A-6: Obviously, some things are changing and I think that the government is facing the problem in terms of taxes and smuggling. The problem is affecting not only Compaq but also all the IT companies and, of course, the fiscal income of the country. But to be honest, we think that is going to help us but is not going to be our main source of revenue in the near future. We are focusing the company more to the services, non-stop products and the wireless markets.
Q-7: The Internet will be without any doubt, the main asset to develop the IT sector in Argentina. How does Compaq include the Internet within its commercial strategy for Argentina?
A-7: Internet is growing really fast. We have a lot of corporate programs with America Online Terra and Ciudad Internet. So we are entering into the market with the Internet service providers. We are very strong in the residential market. Our strategy is to enter into the residential market with the Internet service providers. On the other hand, we have specific multimedia pictures and tools in the computer screen. We also have the best multimedia kit for home computer .
Q-8: Is Compaq following the same commercial and distribution strategy for Argentina, Chile and Brazil or do you follow an independent strategy?
A-8: We have a general strategy but we have to work regionally to try to do our best according to the situation of the IT market in each country. I think that we have a good strategy in Latin America.
Q-9: Does Compaq have future plans to manufacture products within the borders of Argentina?
A-9: Not now, probably some kind of special configurations. For some customers. We are doing that for some customers but we need to change some disks, some processors to make a standard machine. But I would not say that this is manufacturing.
Q-10: Are you satisfied with the support your sector receives from the government, with its policy to diversify the national economy, offering more fields for foreign investment.
A-10: We have very qualified human resources in Argentina. In terms of products, we also have significant researches and an important development. We have also nuclear products for good purposes. But today, Argentina has to reduce the unemployment rate. So how many companies of nuclear reactors you can have in Argentina? How many engineers can you employ there? We should be working in the future in a different structure of our economy.
The government should be the biggest investor in terms of technology. The government is the customer that needs more information in real time. So they need the most sophisticated technology, computers and data processing products. Unfortunately the budget problem that we have in Argentina is affecting us a lot and delays this type of investments.
Q-11: The government could promote the use of Internet and high technology products by offering very low prices for PCs. There was an announcement of the government that took in account these ideas.
A-11: Yes, but the implementation was very bureaucratic. The idea was to sell 1 million PCs to the argentine market. At that time, it was very difficult for me to explain this in Houston because they were expecting that if this was successful we were going to sell more PCs additionally to what we had in our budget. We have the 25% of the market. I was skeptical because I thought that it was not going to be a good deal for the people. It was finally a failure. I think that we need to try it again but the banks and the government have to negotiate credits with very low interest rates. This would have a very good impact on the economy and on the education also.
Q-13: Compaq Argentina had to face difficult situations last year. One of them was the poor performance of the Argentinean economy and the other resulted from the worldwide financial results of Compaq. How did it affect Compaq operations in Argentina?
A-13: The global situation of Compaq did not affect our performance. We had to make our prices more competitive because the local press was talking about it. We had a lot of stress and pressures. So we were also forced to reduce expenses. It was a very hard year for us. On the other hand, we grew 28% of the IT market when Argentina was passing through a very bad economic situation. In the near future we will be the leaders of the IT market. We will have a very strong presence in the services and in the corporate area. Compaq will also be an important player in the public and government institutions. Of course, we will have a high penetration in the residential segment. In three years from now, we will probably have a revenue of 700 million dollars.
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