Toshiba Adopting a PC Direct-Sell Strategy

SAN MATEO (05/08/2000) - Beginning this summer, Toshiba America Information Systems will shift its entire computer sales strategy to a buy-direct model, eventually resulting in a built-to-order (BTO) manufacturing process such as Dell Computer Corp.'s, according to sources close to the company.

The change will take place in three stages, starting with resellers, then business buyers, and finally consumers, the source said.

Even though many leading computer makers are already well on their way to buy-direct/BTO models -- Dell, Compaq Computer Corp., and Hewlett-Packard Co. among them -- Toshiba insisted it was not arriving late to the party. A Toshiba official also said the company's suppliers would not be negatively impacted by its decision to adopt the Dell model.

Steven Adler, vice president of marketing for Toshiba's Portable Systems Group, stressed that Toshiba has for large customers been building computers using the BTO model since 1998.

"All we announced [last week] is we will begin selling direct to a few large customers whose channel partners have disappeared on them," Adler said. "The demand from customers is they've had their channel partners disappear and they've come to us and said they want a direct relationship with our company.

That's more efficient for us in the long term."

Going directly to customers at whatever level should make it easier for Toshiba to further embrace a BTO manufacturing scheme, since ideally it will shorten the amount of time it takes for the company to receive an order, thus allowing for more time to build the products, Adler said.

"We will eventually expand [BTO] to other product lines," Adler said. "When we have a transactional site, we will need to improve our BTO strategy."

Tim Scannell, an analyst at Mobile Insights, in Mountain View, California, said any delay by Toshiba in implementing a buy-direct/BTO strategy is understandable, but warns that changes in supplier relationships have to be done with extreme care.

"The channel has shrunk and shelf-space margins are bad," Scannell said.

"Compaq went the BTO route, so Toshiba probably saw the writing on the wall."

"A year ago, Compaq dropped down to four key distributors and they are just now starting to get back on their feet," Scannell said.

Toshiba America Information Systems, in Irvine, Calif., is at

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