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Dell blames laptop delays on poor forecasts

'Conservative' sales figures blamed for hold-ups

Dell CEO Michael Dell this week blamed downbeat sales forecasting for the long delays in getting new notebooks to consumers. Dell said nothing about problems in painting the laptops, the main reason other executives have been giving customers.

Speaking at the Citigroup Technology Conference in New York on Wednesday last week, Dell 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 website as well as other message forums, citing shifting shipping dates, suddenly cancelled 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 Dell 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 colours - 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 rigour 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 August 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 recently offered $100 to early adopters of the iPhone after the price of the smartphone was slashed by $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 one 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 percent 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.


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