Dell CEO blames laptop delays on poor planning

Better this than 'too much supply and not enough demand,' says Michael Dell; no mention of paint problems

Dell's CEO last week blamed too-conservative sales forecasting for the long delays in getting new notebooks to consumers, but he said nothing about problems in painting the laptops, the main reason other executives have given customers.

Speaking at the Citigroup Technology Conference in New York on Wednesday, founder and recently renamed CEO Michael Dell said the company underestimated demand. "If you go back six months or so when industry growth was starting to pick up, we had quite a conservative forecast for demand," Dell said during the extended Q&A. "That turned out to be incorrect."

Dell customers have complained about notebook delays on Dell's own Direct2Dell Web site as well as other message forums, such as NotebookReview.com, citing shifting shipping dates, suddenly canceled orders and difficulties with outsourced support personnel. Initially, the delays were limited to the XPS M1330 notebook, a top-of-the-line system introduced in late June, but the Inspiron budget line has also been plagued with shipping problems.

Every other explanation for the backlog has pegged paint problems -- the Inspiron, for instance, is sold in eight different colors -- as the primary cause. LCD shortages, although mentioned, have always been relegated to second place.

Dell, however, laid all the blame on the forecasts, which in turn resulted in the company placing too-small orders to its component suppliers. Not enough parts equals problems building machines in a timely fashion.

That will change, he said. "We've spent a lot of time on getting much more rigor in our longer-term forecasts, a couple of quarters out, so that we can accurately signal to the supply base what our needs are."

He also downplayed the long-term impact of the backlog. "As much as this is a challenge in the near term in terms of disappointing customers with long lead times and missing ship dates, it's generally a better problem to have than too much supply and not enough demand," he said. "I believe it's a problem we know how to solve."

Consumers have continued to excoriate Dell's company over laptop delays. On Direct2Dell, the Aug. 24 explanation on the Inspiron backlog from digital media manager Lionel Menchaca generated more than 1,000 comments, a record for the site.

Several people who posted messages yesterday contrasted Dell with Apple, whose CEO yesterday offered US$100 to early adopters of the iPhone after the price of the smart phone was slashed by US$200. "Michael Dell should take a lesson from Steve Jobs," wrote one customer.

"Look at Apple," said another. "They screwed up the early iPhone adopters with the new price. People were complaining and only 1 day later they offer a 100$ credit. Why can't you do something like that?"

Dell is completely revamping its consumer business, Michael Dell acknowledged. Currently, only about 15% of its sales are to consumers. "On the consumer business, we're building a new business there," Dell said. "Our competitors clearly have a scale advantage, and they know a whole lot more about these new channels than we do. There's more for us to do there."

Customers who have waited for weeks -- and in some cases, for months -- would agree.

"I canceled this weekend. Maybe one of you will get yours a day earlier now," said a user identified as hpnutty on the "1520 Ruby Red Waiting Room" thread in the NotebookReview.com forum dedicated to Dell. "They have this concept now where a group of businesses called retailers stock their stores locally with computers. You can go right up to the store, pick out a computer and take it home with you that day. No waiting! What a concept, what a country!"

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Gregg Keizer

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