Channel faces chronic Intel server shortages

As the dust settles over a massive CPU shortage for desktop systems, a new crisis is brewing as supply shortages of standards-based, branded Intel servers throw another spanner into the GST equation.

Resellers claim that a lot of the problems appear to be with distributors and their disinclination to hold any significant stock levels. Conversely, distributors claim they can't get stock of the servers resellers want and their revenues are suffering.

It is not just new financial year spending at stake either. Sources at one of the big three channel vendors suggested it is looking at substantial lost revenues stemming from an inability to meet immediate demand from Government agencies needing to procure from this financial year's budget.

With global vendors able to prioritise what stock they do have it appears that distributors are hurting most, but resellers are also feeling the pain.

David Brent, managing director of integrator ADB Computer Systems, said distributors "don't appear to be holding much stock [of the latest servers] anymore".

With servers, Brent said technology changes so quickly that integrators are not keen to hold stock. "We usually get quoted a 10-day lead time, but they are taking much longer," Brent said. "We tend to web around for the best prices, but invariably those with the best prices have no stock.

David Bilbo, general manager of reseller Mercury IT's systems integration/professional services division, deals direct with Compaq and claims to generally have no such supply problems.

"Most of the stuff we order [from Compaq] tends to work with a one-week lead time," Bilbo said. "We are a Compaq Procare Centre and we also stock a fair amount of its products."Bilbo did say there have been suggestions that no stock of Compaq's new 733, 800 and 866MHz 4- and 6-processor servers is likely in the immediate future.

These are products which will be in immediate demand upon launch, he said.

This begs the question as to whether some vendors are showing preference to resellers with enough buying power to bypass distributors. This is not the case, according to Terry Steer, Compaq's industry standard servers marketing manager, who did concede last week there are supply problems.

"We got caught on the back of reduced Intel processor supply," Steer said, after boasting that May had been the vendor's "biggest month ever" with over 3000 standards-based server sales.

"We haven't serviced the backlog yet, but we shifted 1000 [last] week. We have asked our resellers and sales people to prioritise orders. We are supplying server orders on a first-in first-out basis and hope to service all of the backlog by the end of [next] week."Over at Hewlett-Packard, David Booth, marketing development manager for the division selling Intel servers, was crowing about the level of stock it was carrying. According to Booth, HP has "about three weeks worth of stock", or 500 servers, including the latest 4- and 6-way products, and he couldn't resist a swipe at rivals.

"We are constantly getting feedback from our channel partners that IBM have no stock and if you look at the Tech Pac Web site, there is a massive backlog on Compaq servers. We have ramped up supply and inventory arrangements in anticipation of the huge pent-up demand that will be unleashed on July 1," Booth said. He suggested that "those resellers with access to supply will be in a much stronger position on July 1".

When asked about HP's claimed stock levels, Compaq's Steer responded that, "perhaps it's because they haven't got any customers".

Post-GST demand and being able to cater to it is just what is worrying Compaq distributor Express Data.

Charles Wellington, ED's communications marketing manager, said that supply from Compaq of the latest servers has been particularly slow over recent weeks and it is hurting its bottom line. He said ED needs stock now and into the new financial year so that its resellers can meet customer demand.

"It is a problem and it doesn't look like getting any better this financial year," Wellington said. "Over 80 per cent of our Compaq business is in servers, so supply is critical.

"If we can't ship servers we can't ship all the peripherals that go with them.

It is slowing the whole Compaq business. They are doing everything they can to alleviate the problem, but it doesn't help the immediate situation and my fear now is that [resellers] might start switching brands.

Over at distributor Dicker Data, director Fiona Dicker said it has "plenty of servers" in stock but they are mostly discontinued stock, "not the ones in demand", she said.

"I have some of the newer models but the latest 733MHz CPUs are the issue. I would have expected it to be very busy between now and the end of the year but there are supply shortages."