Tip, We have had lots of hints that the direct model is not as perfect as its proponents portray it. Gateway's many eps misses in the past have occasionally been attributed to too much inventory. Also, if you are lean and mean, like Dell, you are highly dependent on both suppliers and delivery cos. I know they did a lot of shucking and jiving during the UPS strike. And, as much as I hate the chip cos, there is no law that states that components have to remain in glut forever.
There is no real way to get a handle on it because inventory levels maintained during the quarter, not on snapshot day, after rush shipments to people who didn't order anything <G>, are a closely held secret.
But what we know in the Compaq case is that this is an entirely new channel for Compaq and one they expect to be huge. They are certainly not going to wait to order parts as orders come in, at least not at first. So, I think it is fair to assume that they have placed huge orders for their first few operating weeks. My guess is, the impact on components sales would be the same as if a new Gateway suddenly sprang into life out of nothing. But that is conjecture. I know that the new co. increased the amount of components sold. The total impact is just my estimate of what I think Compaq is thinking.
The problem is, box sales is not a zero sum game, but it is close to a zero sum game. Compaq will make sales in its direct line and only a small part will be absorbed by growth in pc unit sales. The rest has to come out of somebody else's market share. They hope it is Dell's, Gateway's and Muei's, but it could just as easily be the other side of Compaq that loses sales. Or, more likely, it will probably be a little of all of the above, plus some HP, IBM, Packard-Bell and Toshiba. The point being, somebody out there, if not everybody out there, is going to be flush with product after this shakes out. And the growth in orders for components will disappear.
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