Mohan -
re: These reports by IDC/DATAQUEST etc are extremely prejudicial to DELL and and favor the Channel Stuffers like CPQ.
Just not true. The numbers 1n 1H98 were 'extremely prejudicial' to CPQ by this same reasoning. The numbers are just the numbers, it's the way we read them that puts the spin on.
If CPQ ships 10 million units to the channels and the channels only
sell 5 million actual units to the customers and if DELL ships 2 million actual units to their customers the report will show.
CPQ sold = 10 million units
DELL sold= 2 million units
The opposite is also true, as it was in Q1 and Q2. Your example would read:
If CPQ ships 5 million units to the channels and the channels
sell 10 million actual units to the customers and if DELL ships 2 million actual units to their customers the report will show.
CPQ sold = 5 million units
DELL sold= 2 million units
So this cuts both ways. In the final analysis, the understanding of the market can not be accurately measured by a single metric. Measuring manufactured units gives a pretty good picture of share overall, especially if taken over a longer period of time (say a year), since those units have to go SOMEWHERE.
When ALL of the majors were indirect, the measuring system was accurate and predictable. Everyone played by the same rules. Dell, by driving significant volume through the direct model, has forced the industry to change business practice. Now the other big players are shifting their price protection models (CPQ, for example, went from 6 months price protection in 2H97 to 5 DAYS in 3Q98). This will help to reduce the disparity in numbers.
This is high calibre Bull S@$$% and no sir I ain't buying it.
I didn't hear any Dell bulls complaining in 1H98 when the measuring system made it look like Dell was doing a lot better than they really were. I brought out this topic mostly to explain that there will be a correction in perception sometime down the road when the temporary channel inventory issue is no longer affecting the reporting.
The suggestion that CPQ and others can 'fool the system' somehow, or double count, or make it look like they are selling units when they are not, is just wrong. They didn't create the measurement system and they don't control it. Every manufacturer, Dell included, plays up the measurements and numbers that make them look good and plays down the ones which show weaknesses in their business model. It's our job as investors to put that spin in perspective and try to see what's really going on. |
