Reseller News

Dell's consumer laptop sales drop as delays continue

Dell Inc.'s laptop sales to the consumer market sank nearly 20 percent in the second quarter because of problems finishing units and shipping them to customers, analysts said today.

The computer maker, which released financial figures yesterday, sold 887,000 notebooks to the consumer market during the second quarter, according to Gartner Inc.'s numbers, said analyst Mikako Kitagawa. In the same quarter last year, Dell sold 1.1 million consumer laptops.

"It's almost hard to believe, to see these numbers," said Kitagawa.

In the financials it released yesterday, Dell said the net revenue from its mobile lines came in at $3.9 billion, a 5.7 percent increase over the same quarter last year. The proportion of net revenues generated by laptops, however, remained flat. Dell doesn't break out its totals for the consumer and business markets, however.

Other computer makers, however, are obviously able to assemble -- and sell -- laptops. Hewlett-Packard Co. sold 2.4 million notebooks to the consumer sector in the second quarter, said Kitagawa, almost three times the number Dell did. "Dell was totally killed in the quarter," he added.

Meanwhile, Apple Inc. sold 1.1 million MacBook and MacBook Pro portables during the second-calendar quarter, a 42 percent jump over the same quarter in 2006.

Although Dell didn't hold a conference call with investors yesterday -- it's been skipping the calls as it tries to resolve account practice problems, which are under investigation by the U.S. Securities and Exchange Commission -- it blamed recent supply and manufacturing problems for lackluster sales.

In a statement issued with the second-quarter numbers, Dell said: "During the quarter, the company ran a higher-than-normal product backlog, driven by better-than-expected demand for the new Inspiron and XPS color notebooks, coupled with supply constraints for several colors, and a tightening in supply of certain flat-panel displays."

That Dell has supply issues wasn't a surprise to Gartner analyst Leslie Fiering. Once the top dog in squeezing the most from its supply chain, the company that made direct sales work has been passed by, pure and simple. "Dell had been the leader [in handling the supply chain], but it's been leapfrogged by HP in the consumer market. And Lenovo has made some major advances as well on the enterprise side.

"Everyone tries to play it very close in terms of the supply chain," said Fiering. "They don't want any excess in there. But if there are any snags at all, it causes problems."

And when problems do crop up, suppliers long pinched by their computer-making customers may balk at going the extra mile. "When you really squeeze suppliers, maybe they're less ready to help you out when things are tight," said Fiering. "We're living in a world where supply chain matters, because pennies matter, because of the margins on these things."

Dell's problems meeting demand have been well publicized this summer. Angry customers who ordered Inspiron and XPS notebooks have vented about delays for weeks, primarily on the Direct2Dell.com site, where the company tries to keep users up to date.

Dell's most recent posting on the delays has collected more than 640 comments since it appeared last Friday. Most of them are negative, and many are from customers so tired of waiting that they've decided to cancel their orders and shop elsewhere.

"This is it Dell, you're starting to lose customers now," wrote a customer identified as Bryant J. "I have several of these Inspirons that I've ordered for personal stuff, and it's approaching 60 days since the order date. I'm the IT director for a large account with you guys, and this is the last straw. You've lost me as a customer."