Buy Now or Cry Later: Shortages Loom for Products

SAN FRANCISCO (07/26/2000) - Even in this age of e-everything, you can't always get what you want. Shortages of several vital high-tech components have arisen this summer, causing product delays that will probably last through the holiday shopping season. Popular products like Palm Inc. handhelds, digital cameras, and top-of-the-line CPUs have been particularly hard-hit.

How bad is it? Popular models of Palm PDAs are in such short supply that shoppers have been buying them at auction on EBay Inc. for US$30 to $50 dollars above list price to avoid shipping delays.

"There is a shortage of a few key components--flash memory and LCD screens," says Palm spokesperson Marlene Somsak. "We expect that the shortage will begin to abate this quarter."

Palm attributes the rise in demand for its popular PDAs to recent seasonal gift-giving occasions like Father's Day and graduation.

With revenues up a whopping 100 percent from this time last year, Palm faces a marketplace that is, according to Somsak, "insatiable" for its products. "We certainly wish that we could put a Palm in the hands of anyone who wants one," Somsak adds.

In A Flash

Analysts say Palm's supply problems are due to shortages of handheld-size displays and flash memory. (Unlike standard DRAM, flash memory doesn't require any source of power to retain its data.)The shortages of flash memory have had widespread repercussions because so many products--from cars to cell phones to MP3 players to digital cameras to Internet appliances--now use it. Analysts blame the shortfall on skyrocketing sales of cell phones and digital cameras, most of which pack at least 8MB of flash.

In fact, AMD and Intel, two of the biggest makers of flash memory chips, say that they are sold out of them for the rest of the year. "We see 18 months before capacity meets demand industry-wide," says AMD's CEO Hector Ruiz.

Prices for flash cards are almost sure to go up, so the sooner you buy, the better. But carefully check configurations on any device that uses flash: Some are changing subtly. In Sweden, for example, some digital camera makers are quietly scaling back the standard amount of flash memory they incorporate, and U.S. vendors won't be far behind. Don't wait too long on cameras as holiday presents, either.

System Woes

Several other problems will pester technology shoppers. A tight supply of capacitors, a key component of many electronic products, could delay the launches of some new products such as Web-enabled cell phones. But you shouldn't have trouble getting a phone, nor are you likely to see higher prices. Cell phone makers are absorbing the extra cost.

Parents who are considering getting a small notebook for their college-bound kids had better accelerate their buying plans. Supplies of displays for smallish 12- and 13-inch notebooks have been tight. The bigger but pricier 14- and 15-inch notebooks should be available.

Some companies have also chosen to delay plans for rolling out their Internet appliances because of the display crunch.

Meanwhile, desktop PC buyers have encountered frustrating delays in their efforts to obtain the latest, fastest CPUs. Intel and AMD have been trying to one-up each other--and to whet the public's appetite for upgrading--by debuting ever-faster CPUs well before they could produce them in volume. Intel's 1-GHz Pentium III chip, announced in March, won't begin shipping in volume until this month, half a year later. And AMD announced its new Duron chip, a rival to Intel's low-end Celeron, in June--a month before shipping it in volume.

Overall, you should order early and read specs carefully. Waiting for lower prices or more features--usually a wise technology shopping strategy--won't pay this year.

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