IBM defends channel strategy

Mark Enzweiler, new general manager of the Europe, Middle East & Africa personal systems group at IBM, has defended the vendor's channel strategy despite its recent disappointing third-quarter results.

Mark Enzweiler, new general manager of the Europe, Middle East & Africa personal systems group at IBM, has defended the vendor's channel strategy despite its recent disappointing third-quarter results.

"We are pleased by our performance," said Enzweiler. "We had a strong July, and a very strong September, when we gained share in all brands - twice the industry average."

"You must look at the inventory," he added. "Inventory is the number one cause of death. It was taking us three to three and a half weeks to distribute products. Why did this happen?"

Pieter Waasdorp, managing director of networking distributor Magirus, agreed that inventory was IBM's problem. "We waited eight or 10 weeks, sometimes longer, for delivery. Three weeks is quick for our market segment, but we were in the same boat as our competition," he said. "There's been a component shortage. IBM was too good perhaps, and we had a sudden increase in sales. There is light at the end of the tunnel."

Waasdorp suggested that improvements might be seen by the end of October. Enzweiler admitted availability had also been a problem with notebooks. "We outgrew the industry," he said. "We did not anticipate the growth."

He said that the channel partners he spoke to believed IBM could improve in several areas. "The claims and credit processing cycle need improvement, as well as availability, and we must expand best-buy models," he said. "Our partners said we should also continue with our aggressive pricing, which is an endorsement.

"The tough decisions have been made in the channel. We need to reduce the number of models. We have customer sales incentive programmes and will be meeting with resellers in the weeks ahead. It is important that we work closely with the channel because the market is changing."

Lou Gerstner, chief executive of IBM, said third-quarter profit rose to $2bn from $1.8bn in the same period last year. Turnover increased just three per cent on last year's results to $21.8bn. Turnover growth was less than IBM and analysts expected.