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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (68905)	10/2/1998 9:28:00 PM
From: Acid	Read Replies (3) \| Respond to of 176387

Mohan, I think Rudedog is just stating that Compaq had alot of product in the channel at the beginning of a quarter and although those units were sold during the quarter, they were not counted by IDC. For example: Let's say Compaq has 1000 units in the channel at the beginning of Q2 (left over from Q1) . During Q2, let's say the channel sells 2000 units, the 1000 already in the channel and another 1000 which was shipped from Compaq to the channel in that quarter. So 2000 units were sold to consumers. But Compaq only shipped 1000 units during that quarter (since 1000 were already in the channel). IDC apparently only counts this as 1000 in sales whereas 2000 were actually sold. Anyway, I think that is what Rudedog was saying. It seems like although IDC would have been understating Compaq's market share during the quarter in question, they must have overstated it during some previous quarter.

To: Mohan Marette who wrote (68905)	10/2/1998 9:43:00 PM
From: Eddie Kim	Read Replies (1) \| Respond to of 176387

Assuming this is correct why are the companies coming out with BOLD-faced press releases of their own to counter the false reporting by IDC or suing IDC for malfeasance? Pfeiffer, of Compaq, has already come out and said the numbers are wrong. In fact I believe IDC acknowledged Pfeiffer's statements and admitted their numbers are "wrong". I guess since this is how they have always done it they continue to do so. I believe, Compaq's numbers should be about DOUBLE than what IDC reports. I told you a lot of people are going to be surprised by the 3Q numbers....although we've discussed this topic on the Compaq and Dell threads countless of times.

To: Mohan Marette who wrote (68905)	10/2/1998 10:44:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Mohan - The questions you ask are common misconceptions about how CPQ does business, and have caused a great deal of confusion both on SI threads and among analysts. 1. Who are they selling it to then if not the customers? CPQ sells less than 5% of its products to customers (i.e. the users of the machines). The rest are sold to resellers or distributors like Ingram, MicroAge, Vanstar, etc. It is important to understand that these ARE the customer for CPQ - that's where CPQ gets the money, and that's where the products go. When they go into the 'channel' CPQ has sold them, CPQ doesn't own them any more. But they have not been configured, no end user licenses have been activated. None the less, those are the sales that IDC and Dataquest measure. When the reseller sells the unit to and end customer, that does not count against manufacturer's sales or share. Are you saying only sales of units (servers in this case) by manufacturers are reported and sales of servers by the channels are not reported in the case of CPQ,HP and IBM? That's exactly what I am saying. I used to believe that IDC and Dataquest reported sales to customers, but I got corrected on this point by Jim Kelley and others. After some research I found out that they were right. Strange as it may seem, IDC and Dataquest measure what goes off of the manufacturer's dock, not what goes to customers. Are we to take it that when Dell sells 1 server CPQ sells 2,ie one by them directly and one by the channel? Each of these would count as one sale (the one CPQ sold direct and the one Dell sold direct). The other CPQ sale would have been recorded at some previous time (when CPQ sold it to the channel). If IDC research has no merit then shouldn't they have gone out of biz a long time ago? IDC research is very good and quite accurate. It is just not measuring what you think. Those inside the industry know what IDC is reporting, for the most part. But apparently many analysts and laymen do not understand the difference between manufacturing numbers and sales to customers. Those numbers are only the same for a manufacturer who sells 100% direct. By the way. Dell is not 100% direct either, but their channel sales are small in comparison to their direct sales (about the opposite of CPQ, maybe 5% indirect). 2. I am assuming they still have the products but are holding the units at the factory warehouse I don't know why you would think that. CPQ did not increase internal inventory in 1Q or 2Q, they actually brought it down a little. The decrease in shipments was matched by a decrease in production. Why would they keep making stuff and sticking it in a warehouse? The goal was to reduce excess product. 3. Assuming this is correct why are the companies coming out with BOLD-faced press releases of their own to counter the false reporting by IDC or suing IDC for malfeasance? There is nothing wrong with IDC's numbers. People inside the industry depend on them and they are an important business planning tool. Just because many lay people and even some analysts (and certainly most of the press) don't understand what the numbers mean doesn't mean they're wrong. it just means that ignorance knows no bounds. For example, the retail sales numbers were recently announced. Many on the CPQ thread, in the press, and among analysts were all wound up - CPQ was kicking everyone's butt, and Dell was not in the top 10. That was true, but Dell was still doing fine. Why? BECAUSE DELL DOESN'T SELL THROUGH RETAIL!!! But that does not make the retail sales figures wrong. It just means that you have to understand that Dell sells direct, and therefore they will not show up in the retail rankings. Just as with IDC, a little thought is required to interpret the numbers. I hope that clears it up a little. IDC and Dataquest are good research firms. You can get numbers about almost anything you need to know. But you still need to understand distribution models to interpret the sales and share figures.