Compaq Computer Corp may be losing customers because of component supply problems, and a resultant product shortfall, but the situation doesn’t appear to be affecting market share in the professional personal computer arena. Demand for Compaq products across the range has increased fourfold over the last six months, the company says, whereas it’s plans only catered for 100% growth levels. To try to deal with the avalanche in demand, the Houston-based group has increased worldwide production of personal computers to 700,000 units per quarter from 200,000 units earlier in the year. While a spokeswoman at Compaq’s European headquarters in Munich acknowledged that delays in product supply were Europe-wide, she said the fault lay in a shortage of components rather than with Compaq’s production lines. We have ramped up production, adding two shifts to our plants in Houston and Singapore and an extra shift in Scotland, she said. Buying components in the spot market to augment supply of Intel Corp chips was hampered by quality control restrictions, she added, leaving the plants with a shortfall.
Rationing
Paris-based Dataquest Europe analyst Brian Pearce notes that Intel is more or less rationing its high-performance 80486s. Resellers interviewed in France and Luxembourg confirmed this, saying that the longest waits were for 80486-based personal computers. In the UK, however, Compaq denied any shortage of 80486 chips, although it confirmed that demand for 80486 machines was high; price cuts have meant that customers are simply paying the same, but buying higher specification boxes. Didier Coulombeix, manager at Iris Informatique SA, a Compaq reseller in France, says that Compaq’s price cuts in June and September, representing reductions of between 30% and 40%, make the ProLinea range ‘comparable with compatibles in price, so, it’s not only the small and medium-sized enterprises that want them, but the large accounts as well’. Furthermore, with the demand for Prolinea, Compaq seems to be cutting back on production of other models, so we end up waiting for everything. Aside from the processor shortage, resellers and Dataquest’s Pearce cite a shortfall in monitors as another cause of delay. Iris’s Coulombeix said Compaq France, for example, received 2,000 colour monitors at the end of October, but had 8,000 orders. Some clients accepted compatible screens, but the others just had to wait, he said. Although Compaq in the UK would provide no details on exactly what components were lacking here, a spokesman did say that suppliers were being asked to ramp up production. This is said to take up to six months. Ross Hooley, senior vice-president at Compaq’s Houston headquarters, believes the situation will lighten by the first quarter of 1993. However, the spokeswoman at European headquarters was told by Houston that the backlog should be completely eradicated by then. Meanwhile, dealers across Europe are reporting delays of between four and six weeks in product delivery. We have had a 60% decline in overall sales since August, Coulombeix moans. The problem is that Compaq France is not receiving enough product from the factory in Scotland. We are waiting from two to 10 weeks for product depending on the model. Jean-Marie Avenel, sales manager for Tekelec, a Compaq reseller in Sevres, near Paris said Our average wait is six to eight weeks…more for certain models, such as the 486 DX or SX and ‘yes, our sales are down as a result’.
By Catherine Everett and Marsha Johnston
The delays, he says, have existed for the last three or four months. According to Microscope, Compaq’s solution to the problem is to have dealers increase their order levels in an attempt to get preferential supply from manufacturing plants. The UK is said to have the lowest order backlog in Europe, and therefore is given low priority in the supply stakes. Unfortunately, Microscope says, the rest of Europe is doing the same, and so backlogs are simply getting worse. And dealers are understandably concerned that if the situation improves overnight, they w
ill be left with a mountain of kit that they can’t get rid of. Compaq claims that it has simply re-introduced its order-scheduling policy of the 1980s, when product supply often exceeded demand. ‘Now, in order to plan ahead and to ensure optimal product allocations, resellers have been offered the chance to schedule their product requirements up to the end of the first quarter 1993. Unlike with other companies, orders to Compaq through this system cannot be subsequently cancelled; scheduling is therefore not being put in place to boost apparent demand, but to provide a more accurate forecast of Q1 demand.’ Not much consolation to dealers. Nonetheless, while competitors such as Dell Computer Corp attest to having gained sizeable orders as a result of Compaq’s supply shortfall, figures from Dataquest indicate that the company isn’t suffering too badly from its supply problems. Pearce, at the Paris office, even sees the backlog as a natural occurence, noting that Apple Computer Inc had similar problems when it introduced its entry-level range. Dataquest reports that on volume, Compaq now has an 11.3% share of the worldwide professional personal computer market, followed by Apple with 7.2%, and IBM Corp with 7.1%. On a value basis, Compaq claims a 14.1% market share; IBM and ICL Plc come joint second with 10.7% each, and Apple third with 8%. The Wall Street Journal attributes Compaq’s success to being the first to market with its low-end ProLinea personal computer line, saying that the company’s early strike may have given it a permanent market-share advantage.
Shortfall
This is borne out by further Dataquest figures, showing that despite the supply shortfall, Compaq in France saw product shipments to distributors increase by 39% from the second to third quarters, with ‘exceptionally strong’ overall demand for personal computers in the third quarter. It exceeded the second quarter, which normally accounts for only about 85% of second quarter shipments. Consequently, the fourth quarter should be gigantic in terms of volume, he said. Iris’ Coulombeix said although Compaq predicted growth of between 20% and 30% for the last few months of this year, it is likely to end up with a growth rate of between 50% and 80% instead. Pearce predicts that as a result, Compaq will probably not be able to fill all of its backlogged orders in the fourth quarter, which should portend a good first quarter 1993 as well. Nonetheless, there have been some defectors. ComputerLand Europe is switching some of its centres to Zenith Data Systems, because it’s in a pos-ition to deliver, a spokesman said. Whether they will stay with ZDS or not is a question because Compaq has such a strong position in the market, he added. Between 16 and 20 ComputerLand centres Europewide are said to have begun buying ZDS prod-uct. ComputerLand in the UK is sim-ply lessening its reliance on Compaq, and looking to IBM, Hewlett-Packard Co and Tandon Corp instead.
