Compaq Slovakia was established in 1998 by transformation of Digital Equipment Slovakia. Today, it ranks at the 1st place in selling PCs and Intel services in Slovakia. You have even won the prize of "IT company of 2001". How would you define the steps that marked the development of Compaq over the past 3 years?
Compaq has been present on Slovak market since 1993, but only indirectly. There was no subsidiary here. At that time I was working for Digital Equipment Corporation's subsidiary, which was established in Slovakia in 1991. When we started in 1991, it was only two years after the political change of this country. It was absolutely necessary to bring some professionals with market experience and corporate know-how. This process continued until 1996. When Compaq finally created its subsidiary in 1998, after the merger with Digital, and took over Digital staff, positions on all levels had already been occupied by domestic professionals.
You are today No 1 on the Slovak market. In what segments do you have the highest share?
We have 11,3% of the total IT market according to International Data Corporation figures of 2001. But in some segments we have very high shares, for example in standard Intel servers our annual market share is above 50% which is three times more than nearest competitor's share. In storages segment we have 28% market share, in notebooks 25%, in desktops we have 19% which is twice more than nearest competitor's market share. We are strong market leaders in all these segments. But Compaq is not only a hardware seller. We also provide complex services representing 28% of our total revenues. This gives our company a very strong position in case of recession in any particular segment.
What differentiates Compaq from its competitors on the Slovak market?
Apart of strong position in hardware market, Compaq Slovakia provides the full range of traditional services from maintenance, application support to business critical services and provides also outsourcing which is new in this country.
Last year we signed up one of the largest outsourcing contracts with the paper manufacturer company, Cappa. I believe that this country is slowly moving to the point where companies, especially those with foreign capital, are considering outsourcing.
It is a complement to the traditional scheme, which was to have a huge IT department doing more or less everything. Outsourcing is an efficient way of approaching the problem of IT as a service. This idea is very strong and it is economically justified. Apart of several manufactures the example of a move in this direction was made also by the management of the Social Insurance, a huge organization covering all social services for the whole population. U.S.A. Trade Development Agency should deliver the feasibility study of outsourcing for this institution.
Who are your main customers in Slovakia?
We have a stable portfolio of customers. I believe we have gained credibility and trust, due to the fact that we haven't failed, even in projects with higher risk, and we deliver our products and services always in time and for the contracted price. Therefore it is not surprising that our company has one of the highest customer-satisfaction index among European subsidiaries. As Compaq offers a wide range of products it is possible to serve only the major customers directly, leaving the small and medium customers with the indirect services provided by reliable partners. Those contribute to our sales of hardware products with more than 70%.
We have 10 major partners contributing by around 50% to partners' sale and about 200 of small and medium partners, who are spreading their business activities all over the country. And their number is still increasing thanks to the professional relationship with our partners, based on reliance and trust.
This reliability was confirmed many times. We often approach successfully our customers jointly in tenders when specialised partners add their know-how to our profile. Recently we won jointly with partners tenders in Slovak Gas, Slovak Rail and others in Energy, Banking and Telco areas.
Your sales and revenues experienced an increase with 2 digits this year. Are your results in accordance with your plans and what are your expectations for next year?
While in 1998, after the merger, we experienced a drop in performance, in 1999 we recorded a 29% growth, in 2000 we had a 22% growth, and even in world recession of 2001 we grow more than 11% (sales in USD). All these figures are above market growth.
Although the worldwide recession will improve only slowly and we expect traditionally negative impact of elections on business, we believe that our strong position will be preserved. According to IDC information, the Slovak market will grow by 8,5% in 2002 and we plan to grow above this level again. | Compaq seems to be very active in the socio-economic development of local communities. How would you define your corporate social responsibility in Slovakia?
As I think that a true businessman should see beyond the profit of his own business, I try to be actively involved in diversely focused projects. I act as the vice-president of the American Chamber of Commerce, the vice-president of the Association of Electronics and Electronic Industries, a member of the General Council of the Slovak Association of Entrepreneurs and I also participated in the team responsible (along with the Ministry of Economy) for the elaboration of the project of a high-tech park near Bratislava. Serving all those positions is a rather time-consuming and demanding task. However, I find it worth the strain.
As for Compaq, our resources for sponsorship are limited but we try to help. We have already helped to support two programs for university education in 1992 and 1997, when we donated the technology for 11 universities with a total value of $2.5mil. Our other supportive activities reach the level of hundreds of thousands of dollars, contributed to various educational programs or other social programs.
Over the next few months, HP and Compaq Computer should merge, leaving the market with the 3 majors, Dell, HP-Compaq and IBM. What are your expectations for the new entity on the global market and will it have any impact on your development strategy in Slovakia?
Both companies are very cautious not to provoke any speculations in the public. It is indeed, to avoid any interference in both the legal process of the assessment of this merger and the decision taken by the shareholders. Currently, there are three major multi-dimensional IT companies: IBM, HP and Compaq. I didn't mention the software companies, even the biggest ones as Microsoft, Oracle or SAP which I perceive as specialized companies. When HP and Compaq merge and create the company with joint revenue close to 80bn $ they will become an extremely strong entity and a challenge for IBM. The total revenue of both companies in Slovakia is 1.5 times bigger than IBM's and in other central European countries it is even higher. I expect that the new company would have a very competitive position in this region.
Compaq Slovakia is an example of a successful FDI in Slovakia. How would you qualify Slovakia as a potential investment destination and what would you suggest to the government to boost FDI in the country?
Slovakia has an extremely good position in Central Europe and in Europe as a whole, both for manufacturers and distributors. The market itself is not so strong but the advantage is a central position of the country due to which you can reach about 300 million people within one-day truck-drive. There has been always a good level of technical education. For example in the 1990s students from Slovakia were repeatedly successful in the Microsoft worldwide contests. Investors will be definitely interested in the fact that even the workers have a full basic education and another three or more years of apprenticeship. If we take into consideration that the average salary in Slovakia is 250$ and the fringe is 38% then this qualified labour force is really inexpensive.
There are also easements prepared by the government. These are comparable with all neighbouring countries and include for instance tax holidays for up to ten years. Large investors have the opportunity to negotiate special conditions and influence the conclusion of such conditions into government memorandum. Volkswagen and U. S. Steel are good examples of cases in which the government proved to be very flexible when an important investor enters the market.
In Slovakia there was a deficit of direct foreign investment in comparison with the neighbouring countries. This was partly due to western attitude, which was rather cautious towards the country during the era of the former government.
I suppose that Slovakia deserves to be in NATO. It is not only my desire but also all of the major political forces. There is also an increasing support from the population reaching currently over 50% and we assume it will grow as people will understand that NATO and the European Union are interrelated entities. Therefore, I believe that there will not be any discontinuity in the process of political orientation of this country and that the next elections will not undermine the country's perception as a "country sharing western values".
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