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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Jack T. Pearson who wrote (27238)	6/6/1998 12:34:00 AM
From: Eddie Kim	Respond to of 97611

Call me an old fashioned guy, but I like to see the computer before I buy it. Furthermore, if the machine has problems all I have to do is return to the place I purchased it and let them worry about it. It's not so much about cost, but of time and convenience. Sometimes its just a pain in the ass to call technical support...which DELL was rated one of the WORST by Consumer Reports I should add. About these empty shelves...when I asked the salesman he said it was due to the fact that Compaq is coming out with new models within weeks. I guess Compaq stopped production of the old models and are gearing up with the new ones. I just don't know. Perhaps on the 16th, Pfeiffer will announce they have begun shipping millions of new computers to the resellers. That would get some cheers I bet.

To: Jack T. Pearson who wrote (27238)	6/6/1998 1:34:00 AM
From: rudedog	Read Replies (3) \| Respond to of 97611

Jack - People just don't understand the consumer group at CPQ. Consumers is not BTO or ODM or any of that, it is a completely separate distribution based on the retail electronics model. Likewise the manufacturing is a completely different model. The consumer group picks sales windows (there are 4 major ones a year I think) and CPQ designs products to hit those windows. The factory runs 100% 24 hours a day jamming out products to hit the window. They roll out into the stores as fast as they can ship them. Then as the lead time for the next window comes up, the factory shifts to the new models designed for that window. There is essentially one build for each product for each window, and when it's done it's done. The reason the products are hard to find is that they are selling like gangbusters. These products have been sold out almost all the time since the introduction of the presario. CPQ keeps adding capacity and shifting production over to the consumer line but still demand exceeds supply. We are in the transition from one window to another right now. The next one after that is 'back to school' and after that is 'XMAS'. I don't know the production lead times or the actual times for the windows. So none of the discussion we see in the press have anything to do with consumer group. No excess inventory here, ever, no ODM, no obsolete product at fire sale prices. And no cost advantage to Dell or anyone else - this model is the most efficient in terms of use of facilities, cost of capital, etc. Of course if they ever miss one of the windows it will be very painful. This is a dangerous high stakes game. Consumer margins are lower than CPQ's product line overall (about 20% I am told) so if capacity is devoted to presario and the server business jumps, then CPQ loses high margin business if they can't shift the capacity back. That's what the new mfg system is supposed to solve by allowing smaller product runs to be done efficiently. CPQ's consumer group is one of the great stories in the industry. It has not gotten the press attention that the 'Dell Model' gets because it is much harder to understand, but consumer kingpins like Sony have certainly taken notice and are trying to copy CPQ just as many are trying to copy Dell in the mainstream computer business.