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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Richard Gibbons who wrote (43796)	1/18/1999 10:04:00 AM
From: accountclosed	Respond to of 132070

It would be good to have information on what terms the inventory is offerred on. It may not cost the channel anything additional if extended terms and/or liberal return policies are allowed.

To: Richard Gibbons who wrote (43796)	1/18/1999 12:36:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Richard, In my IFC article, "Beyond The Valley of the Dulls-Analysts," I said that the channel reminded me of a guy who says, "stop me before I kill again." <G> Here is what happens: 1. Every boxmaker says they have a hot new product that will gain market share, so their predictions of sell-through are almost always overly optimistic and some in the channel see them reflected by the researchers the boxmaker's hire and they believe the hype. 2. Each player in the channel believes they will gain market share. You can understand why that is true for an Ingram, as they have grown like a weed, mostly due to grabbing market share. 3. When the channel has all it wants, and a Compaq wants to make its eps, it offers "incentives." Like the guy who overeats at a restaurant, the Chocolate Decadence may look too good to refuse and the chances of a cardiac problem seems remote. <G> 4. The current situation does not reflect the environment where the channel cut its teeth. Sales growth of 30-40% as recently as 1995 is ingrained in these folks. The fact that pc sales are now growing in the sub teens and will turn negative this year never even occurs to them. They see the turnaround just around the corner. 5. Many get sand-bagged by the OEMs. This past quarter, for example, several OEMs filled up Ingram at what Ingram considered a low price, and then offered the same price to Ingram's customers directly. This sort of thing happens about once every couple of years, so you can understand why they forget by the time they get suckered in again. 6. You also have to remember that not only are pc sales falling like a rock, but the lower average selling price is a killer for distributors and resellers. The only way to make the same amount of money, much less grow, is to sell many more pcs. They might as well order the crap and cross their fingers, because they certainly won't hit their numbers if they are lean and mean. MB