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Dell struggles with PC shipment delays

Joe Wilcox, CNET News.com CNet

Published: 19 Dec 2000 11:28 GMT

This year, Santa may be leaving some Dell Computer customers IOUs under the Christmas tree.

Dell has been struggling to get its top consumer systems -- the Dimension 8100 desktop PC and Inspiron 8000 notebook -- to customers, with some people reporting six-week delays on orders placed in November. For some Dell shoppers, this means the shiny new PC or notebook they had been counting on for Christmas won't arrive until after the new year.

"This is obviously misexecution by Dell, and frankly it's quite dangerous," said Gartner analyst Kevin Knox. "People went to Dell all the way back in November, and if they can't deliver product before Christmas, this is going to leave a bad taste in a lot of people's mouths."

The problems appear to predominantly affect the two top consumer models and are unrelated, according to Dell. Many of the Dimension 8100 ordering problems stem from a Web ordering glitch that let customers order a USB keyboard and mouse that are incompatible. Supply problems with 8X CD-RW drives and 32MB graphics cards apparently slowed Inspiron 8000 orders.

For Dell, the delays are doubly disastrous, say analysts. With consumer PC sales down anywhere from 18 percent to 30 percent from last holiday season, Dell cannot afford to leave sales on the table. Potentially worse, the problem affects the company's highest-profile and highest-margin consumer systems.

"This news based on customer feedback about the 8100 is a disappointment, because this is Dell's latest product -- highest-margin desktop -- and during a major slowdown in the PC industry, Dell is having trouble getting its product to customers," said Technology Business Research analyst Brooks Gray.

Dell places part of the blame on higher-than-expected demand. "The [demand for] 32MB graphics cards beat all forecasts, so we did have a supply issue," said Dell spokesman Tom Kehoe. He noted that Dell stretched out the lead times on the Inspiron 8000 beyond the typical four business days.

Kehoe said the graphics card problem has been fixed with the supplier, ATI. Dell expects to begin quoting normal shipping times on the Inspiron 8000 starting Tuesday.

He also confirmed the keyboard-mouse incompatibility problem that stalled 8100 orders. "[Instead] five of monkeying around with this, everybody who ordered this configuration will get a USB mouse. End of problem," he said.

Dell estimates that only about five percent of Dimension 8100 orders were affected by the keyboard-mouse incompatibility problem.

But other problems, including the lack of availability of 17-inch flat-panel monitors, have also held up orders.

Dell's problems with the Dimension 8100 are not the first affecting Pentium 4 systems. In late November, Best Buy pulled HP Pentium 4 systems from store shelves after discovering a bug that affected how the computer's basic input-output system (BIOS) interacted with the Intel processors.

The Dimension 8100, Dell's first consumer Pentium 4 system, sports the new look introduced with the OptiPlex 150. With the new model, the company abandoned its signature beige for dark gray. The Dimension 8100 also received THX certification, making it one of the first entertainment-oriented PCs on the market.

The Inspiron 8000 introduced graphics capabilities comparable to those of desktop models and the ability to run DVD and CD-RW drives at the same time, both distinguishing features.

The black eye to the Dimension 8100, which incorporates the first major Dell chassis redesign in about four years, is something "the company cannot afford," Gray said.

He added, "There's a risk here that end-user customer satisfaction could fall."

To its credit, Dell has aggressively dealt with the string of unrelated problems connected with introducing new PC models with cutting-edge technology. The Round Rock, Texas-based company has used its support Web site to reach out to frustrated customers and has sweetened some orders with extras.

But that may not be enough given the current buying climate, analysts say.

"Dell can ill afford this kind of problem in the consumer market, especially where they are not nearly as strong as they are in commercial," Knox said.

During the third quarter, Dell pulled into fifth place in US consumer PC sales, with 5.8 percent market share, according to IDC. Hewlett-Packard and Compaq Computer locked in a near tie with 19.8 percent share, followed by Gateway and Emachines, respectively, with 14.6 percent and 9.3 percent market share.

"It's a major problem, especially [as] people have bought these things as gifts and they want them for Christmas," Knox said. "I wouldn't be surprised if people canceled their orders and went down to the Gateway Country stores."

Some people have done just that. One person posting on Dell's support Web site said Saturday, "Today, I walked into a Gateway Country store and ordered a system better than an 8100 for less money, scheduled to be on my doorstep 21/12."

On Friday, Gateway for the first time started carrying stock of three PC models in its Country stores. The marketing shift lasts through the holiday shopping season.

Mock orders placed Monday by CNET News.com with Dell found lead times to be long but not unreasonable. A Dimension 8100 has an average delivery time of 2 1/2 weeks from date of order, a Dell sales representative said. A top-of-the-line Inspiron 8000 ordered Monday would tentatively arrive in early January, which works out to a lead time of nine business days.

But that may not satisfy consumers who ordered early and won't see their systems for Christmas. In postings on Dell's support Web site, many frustrated shoppers noted reasonable order times that turned into multiple delays.

"My Dimension 8100's ship date has changed more times than Palm Beach has counted its ballots," noted one person who was posting on the site. The Christmas gift now has a delivery date of 4 January. "When I ordered this system, I was certain that I would receive it before the next president was chosen."

Another person posting on Dell's support Web site recounted placing a Dimension 8100 order 20 November -- the day of availability -- with an initial ship date of 30 November, which changed to 7 December, then 8 December, and finally 13 December before the customer cancelled the order. Problems with the USB keyboard compelled the customer to start from scratch 13 December, when a sales representative promised a ship date of 15 December.

Instead, "the ship date on the new order is 2/1/01, over six weeks from my original order date," the Dell customer wrote.

Other Dell buyers voiced similar gripes, which the company's support site moderator Chris Chandler handled with some explanation.

He cited the graphics card supply problem on the Inspiron 8000 and a shortage of CD-RW drives. "There were a lot of systems waiting on these CD-RWs and they will all be moving soon," he wrote Friday.

But the major problem appeared to be with the Dimension 8100, where a glitch with Dell's Web ordering system allowed many customers to order an enhanced USB keyboard and Microsoft IntelliMouse that were incompatible. That problem has since been corrected.

The good news for Dell is that neither system is high volume, although both are high margin and affect customers willing to spend a bundle on a new computer. Either way, given the tough sales climate, analysts predict the glitches will hurt Dell.

"It's just unfortunate, but there's little good reason," Knox said. "It's misexecution by Dell and very bad timing."

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