Rich,
I appreciate your comments let me address each one
>>> 1) In which channel, the commercial channel or retail channel.
this is inventory in the commerical channel (ie. tech data, vanstar, entex, microage etc etc. as far as retail channel, CPQ i believe sells direct to the COMP USA's of the world
>>> 2) Your question tries to create the impression that you KNOW that there are 300,00 units of any kind in any channel. You are professing to know more than manufacturers know themselves at any point in time. If you are giving numbers, please state your sources.
Actually I was referencing an interview in CRN with Mike Pocock, Compaq's vice president of North America channel sales. I have included that interview at the bottom of this note. I do not know how CRN actually collects this data, they state it is based on weekly surveys of the channel. I do not make this stuff up and this info is coming right from the horses mouth
>>>> 3) Screwdriver shops like Dell are necessarily oriented towards less complicated products.
it is you my friend that has bad info and I would question your sources on this. Dell is accroding to IDC the number two supplier of servers to corp america. plus I have never heard of a 6-way server. their are 2-ways, 4-ways and 8-ways. dell ships 2 and 4s, and has announced plans for their 8-way offering along with CPQ HP and IBM. If dell's growth in the 4-way market is any indication of their what their success will be in the emerging 8-way then CPQs exepected margins from this segement are in grave danger. as an aside classyfing dell as a "screwdriver shop" shows a serious lack of knowledge on your part on the PC industry. they are the number one or maybe number two provider of desktop PCs to corp america (depending on whode data you believe, and the number two provider of servers to corp america, now I am not sure what you mean by "screwdriver shop" but the market data does not support your characterization
Pocock article below for your reading pleasure, but after reading don;t get too excited you can't sell your CPQ stock until monday, just kidding but I couldn't resist
Jason
Compaq's Pocock Speaks Outs On Channel Assembly
By Joe Wilcox <mailto:jwilcox@cmp.com>
Houston
3:41 pm EST Thurs., Mar. 12, 1998
..............
Compaq Computer Corp.'s top channel executive said the vendor is ramping up its channel assembly program in an effort "to get off the drug" of channel stuffing, but acknowledged that it will be the end of the year before the strategy is fully operational.
"This model we're under, channel stuffing, whatever you want to call it--we need to bite the bullet," said Mike Pocock, Compaq's vice president of North America channel sales. "We need to address how we are going to get off this drug. And it has to be mutually beneficial for both sides. We have to do it together with the channel. We got in it together. We need to get out of it together." He said the Houston-based company is aiming to ramp up channel assembly production in the second quarter and have it fully operational by year's end.
But Compaq's desktop inventory levels in the distribution channel are still running more than twice as high as the combined desktop inventories of Hewlett-Packard Co. and IBM Corp.
According to a spot-check today of seven distributors' online inventory systems, Compaq had approximately 250,000 Pentium, Pentium Pro and Pentium II desktop systems in stock compared with 58,000 for IBM and 40,000 for HP.
Pocock said Compaq is working with nine channel assembly partners: CompuCom Systems Inc., EDS Corp., Entex Information Services Inc., GE Capital IT Solutions, Inacom Corp., Ingram Micro Inc., MicroAge Inc., Tech Data Corp. and Vanstar Corp.
As Compaq looks to significantly reduce channel inventory, the No. 1 PC maker is stepping up efforts to fully implement its Optimized Distribution Model (ODM). ODM is Compaq's supply chain re-engineering strategy that includes channel assembly and build-to-order programs.
"We have to get the inventories down to acceptable levels," said Pocock. "We're now executing against ODM, particularly on the desktop side, where they don't need to carry that much inventory. For us to take out all the inefficiencies and reinvest those monies . . . and compete against the direct model, we have to get the inventories down."
Pocock said correct inventory levels vary by product category. He said desktops and notebooks need to be less than one month, but "when you get into the enterprise space, you basically need to have a little more inventory because of the nature of the business." Pocock said this is because the lead times and project rollouts are longer and the configuration of these systems takes longer.
Pocock's comments came after the PC maker stunned Wall Street last Friday by reporting that it will break even at best in the first quarter with sales the same as the year-ago quarter.
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Snapshot of Distribution Channel's Commercial Desktop Inventory
Compaq
Pentium Desktops--174,000
Pentium Pro Desktops--76,000
Pentium II Desktops--1,500
Total--251,500
IBM
Pentium Desktops--52,000
Pentium Pro Desktops--5,600
Pentium II Desktops--350
Total --57,950
Hewlett-Packard Co.
Pentium Desktops--23,400
Pentium Pro Desktops--3,400
Pentium II Desktops--13,000
Total--39,800
Source: March 12 spot-check of seven distributors' online inventory systems |
