Direct PC sellers pay the price for efficiency

Just when you despair at the seemingly endless headlong rush to embrace new technologies and efficiencies, along comes something…

Just when you despair at the seemingly endless headlong rush to embrace new technologies and efficiencies, along comes something to restore your faith in the simpler life.

Most recently Dell and Gateway, which between them employ 5,000 people in Ireland, announced they would fail to meet analysts expectations on profits. The alerts by the two largest direct sellers of computers took on added significance alongside the absence of such warnings by Compaq and Hewlett-Packard - whose Irish workforces total 4,000 - which sell the bulk of their output by more traditional network of dealers.

The cause of their troubles? Efficiency, according to at least one analyst. Basically, the direct sellers have made a virtue of building PCs to order and holding tiny inventories, sufficient to last only three days. Problems in getting a sufficient supply of processors and chips to meet accelerating consumer demand.

This meant that, at Dell for instance, it was taking up to 25 days to process an order from arrival to delivery, compared with the more usual seven to 10 days. Tut, tut.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times