Michael Dell probably wasn’t the first to say that the personal computer industry is overdue for a shakeout. But when Dell says anything about PCs, it often becomes conventional wisdom.
Dell, the founder, chairman and chief executive of Dell Computer Corp., said last week that there are too many personal computers chasing too few customers.
“I certainly think that there will be some consolidation and competitive shakeout,” Dell told analysts in a conference call to warn that the Round Rock, Texas, company would see lower profit for the fourth quarter.
A few Wall Street analysts raised their ratings on Dell, betting that its efficient cost structure–selling direct–will leave the company at or near the top of the heap.
And nobody is counting out Compaq Computer Corp.
The Houston company reported fourth-quarter earnings last week that beat lowered analyst expectations.
But it’s feeling the heat too: After 17 straight quarterly increases in consumer sales, Compaq broke even in the hard-hit segment. So far, no one has placed any big bets on which vendor will fall victim to consolidation. They just know it’s coming.
Among the indicators are aggressive price-cutting and chaos in the supply chain, leaving many flanks exposed.
Dell in particular has used falling component prices to lower its prices and grab market share from competitors.
“There isn’t any shelter. It’s brutal,” said Roger Kay, manager of International Data Corp. desktop PC research.
IBM Corp. left the consumer market last year. Packard Bell NEC Inc. has left the U.S. market altogether.
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