Dell Computer Corp CFO Tom Meredith says he sees no change in current expectations for the company’s quarter, despite other PC vendors’ revenue warnings, and says his company continues to experience strong demand for all products, in all geographies and has seen no additional pricing pressures. We’re very confident, Meredith said. PC industry analysts at Deutsche Morgan Grenfell blame Compaq Computer Corp’s slowdown on the dislocation in its distribution strategy as it moves to a build-to-order model like Dell’s. It has led to an inventory management problem as the channel, concerned it might get caught short as Compaq transitions, has been filling the shelves with boxes that are all price-protected by Compaq. DMG thinks the kind of mass customization which can’t be addressed by Compaq’s mass manufacturing capability will be increasingly addressed by channel assembly and configuration. DMG thinks Compaq is going to find it difficult to transition to the BTO model by the summer and notes it has already pushed back its channel inventory expectations to three to four weeks per turn of inventory from a goal of two weeks. Meredith claims there is no company which can drive new channel inventory economies faster than it’s able to. Latest Computer Intelligence research suggest PC penetration in US households reached 45% in 1997 up from 40.2% in 1996 – that’s five million more homes with PCs – although it doesn’t expect it to pass 50% until 2000.
