IBM grapples with ThinkPad shortage

Shortages of components such as DVD and CD-RW drives have hampered notebook availability from nearly all computer makers, but analysts said IBM's particular situation appears to be isolated.

Of the 108 configurations of ThinkPads available through dealers, 79 are back-ordered into August, ARS analyst Matt Sargent said today.

The number is unusually high when compared with those for notebook rivals Compaq Computer and Toshiba, which also sell through dealers. Compaq's backlog affects 30 configurations out of 89, while Toshiba's is back-ordered for 13 out of 35 configurations.

"Not only is this problem with the number of (configurations) they have back-ordered, but the depth their (configurations) are back-ordered is huge," Sargent said. "IBM has several models that are back-ordered over 500 hundred units, whereas Compaq and Toshiba don't have anywhere near this kind of backlog."

Sargent said the shortage is not restricted to IBM's newest models, the ThinkPad A20 and T20, but also is affecting older ThinkPads, such as the 570 and 240.

Several mock orders made by CNET News.com to ShopIBM also indicated serious availability problems. Salespeople said ThinkPad A or T models ordered today could not be shipped before the second week in August.

Part of IBM's problem may be logistical, as it streamlines its popular ThinkPad line. In May, Big Blue replaced the ThinkPad 600 with the T series and the ThinkPad 390 and 770 with the A series. During the third quarter, IBM plans to further consolidate, replacing the ThinkPad 240 and 570 with another single-letter model.

"This is a pretty big transition for IBM, with a lot of new models and form factors, and that is always hard," PC Data analyst Stephen Baker said. "They're always cool because their notebooks are cutting-edge. On the other hand, that can make it hard to deliver stuff because you're right at the cusp of what's doable and what isn't."

Ironically, the ThinkPad is one of IBM's best-selling computer systems, which may be compounding the problem.

Because of a quiet period before earnings, IBM spokesman Ray Gorman said he could not fully comment on the shortages, other than to point out that the company kicked off a major ad campaign when it released the ThinkPad A20 and T20 models.

"We're going through a major product transition, and supply on demand is one major result of that," he said. "We do expect most T20 orders to ship in the next two weeks and the A20 within four weeks."

Not-so-smooth sailing
Dataquest analyst Mike McGuire said that despite a tremendous re-engineering of its distribution model, IBM has some kinks to work out.

"I think they're victims of their own success and/or they continue not to get the forecasting thing right," he said. "You've got to wonder at some point if they're underselling their own products in their own minds."

The timing is terrible for IBM, which has spent almost two years digging its PC division out of a deep hole of unprofitability. It will reveal second-quarter earnings Wednesday.

After losing more than $800 million in 1998, IBM's PC division reduced its losses to $571 million last year. But the beleaguered division still managed to rack up a $180 million loss in the first quarter, following a tricky transition out of retail in favor of direct sales.

IBM consumer and commercial PC sales in the first quarter plummeted 45 percent and 30 percent, respectively, but the transition had little effect on ThinkPad and Netfinity server sales.

The ThinkPad shortage may be a short-term problem, but it will almost certainly mean lots of lost sales for IBM, Baker said.

"If somebody is having trouble delivering, it's always an opportunity for everyone else," he explained. "I'm sure Compaq and Toshiba are working closely with their (dealers) and distributors to let everyone know there is availability at Toshiba and Compaq."

IBM ranked fourth in notebook shipments during the first quarter with 10.2 percent market share both worldwide and in the United States, according to Dataquest.

Worldwide, Toshiba captured the top spot, with 17.1 percent share, followed by Dell at 10.8 percent and Compaq at 10.7 percent. In the United States, Dell dominated, with 21.4 percent market share, followed by Toshiba with 15.3 percent and Compaq with 14.9 percent.