Price wars, demand leave hottest new computers in short supply

PERSONAL COMPUTERS

November 16, 1992|By PETER H. LEWIS

A colleague went to the local computer store and ordered a Macintosh Powerbook 145. The store took his money and said delivery would be in three to four weeks.

Five weeks passed, then six. He complained, and was told the Model 145s were "seriously back-ordered." He got the same story from a couple of other computer stores.

And it's not just Powerbooks. Shoppers trying to find Compaq ProLinea machines, IBM ValuePoints, Dell Dimensions or any other popular computers often find that they must wait weeks, and sometimes months, for their orders to be filled.

Supplies of color monitors, hard disk drives and power supplies are also "constrained," as salesmen like to say when the elves have not been working fast enough.

If it is any consolation, the big corporate buyers are waiting right along with somebody who wants a single machine.

"Everybody's got short supplies," said Bobby Orbach, president of Orbach Inc., a computer industry consulting concern in New York City.

For thousands of computer buyers and sellers, frustration over

short supplies is growing. And it appears that no relief is imminent, because computer companies are forecasting continued high demand for the next six months.

"Business is hot, and nobody expected it," said Seymour Merrin, president of Merrin Information Services Inc. of Palo Alto, Calif.

Benjamin Rosen, chairman of Compaq Computer Corp., said recently that even if his company could obtain all the parts it wanted, it would still not be able to meet demand for Compaq's ProLineas.

The short supplies are the result of several factors, foremost among them the PC price war that started in June. Computer companies grossly underestimated demand for new, lower-cost computers. As a result they did not order enough components to make the machines.

Once they realized the magnitude of the demand, factories were put on double or even triple shifts, but the companies that supply the computer makers with key parts could not keep up.

When economic indicators suggest that the country is mired in a stubborn recession, why are so many computer companies overwhelmed with demand?

"It's a phenomenon," Mr. Merrin suggested, and it is fueled by three converging groups of buyers.

Owners of older XT- and AT-class computers are discovering that they have to buy newer and more powerful machines to run today's software, especially Microsoft Windows 3.1.

Companies that had planned to add computers anyway are snapping up bargain-priced PCs, especially those built around the i486 microprocessor. "What we're getting today in terms of value for the dollar is unbelieveable," said Mr. Merrin, who was one of the country's first personal computer dealers.

Last, Mr. Merrin said, are "the new buyers, who may have been computerphobes." Small businesses are discovering that they cannot afford not to have a PC, since all their competitors and suppliers and accountants are using them.

And, after a decade of seeing advertisements and listening to boring cocktail party chatter about bits and bytes, many individuals are finally confident enough to take the plunge, using the "If my idiot brother-in-law can learn to use a PC, then I can too" rationale.

All these shoppers are converging on an industry that is famous for periods of feast and famine. The advice from Mr. Orbach is to keep looking. "The smart retailers have already boosted orders to get larger allocations," he said. "If you really hunt and know where to buy, you may pay a little more but at least you'll find what you want."

"The retailers who are less fortunate can always, if they're good, move people to different brands," Mr. Orbach added.

Experienced computer buyers learned long ago that despite all the braying by computer companies, there are really very few important differences among major brands. So, switching to Brand X is less upsetting to them.

But for novice computer users, who often investigate a potential purchase for weeks or months and count each byte being offered, it is discouraging to be told that their first-choice machine will not be available until after the holidays.

Apple Computer Inc. customers are in different straits. Our Powerbook 145 shopper could not switch to Brand X because there are no non-Apple Powerbooks. Industry analysts suggest that Apple has taken orders for 50,000 more Model 145s than it has been able to produce, and that there are even 30,000 back orders for Model 170s, which Apple discontinued in September.

So rather than wait indefinitely, the shopper decided to spend a few hundred dollars more for a Powerbook 160, which the store had in stock. He will be happy with it because it is a better machine.

While Mr. Merrin expects the shortages to last several more months, he does see a change ahead. "Our industry has a classic pattern," he said. "Like politicians, we never learn from history. First we underproduce, and then to meet demand we overproduce."

(Peter Lewis works out of the New York Times' Austin, Texas, bureau: [512] 328-8258.)

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