Dell's Leadership Positions Intact Though Delivery Problems Emerge in 4Q99 Customer Satisfaction Ratings.

Business/Technology Editors

HAMPTON, N.H.--(BUSINESS WIRE)--Feb. 2, 2000

IBM Moves Up in Both Notebook &Desktop Satisfaction Rankings; Compaq

Shows Strong Improvement in Intel Server Satisfaction

Technology Business Research (www.tbri.com) has just completed its twelfth consecutive Corporate IT Buying Behavior and Customer Satisfaction Study, a quarterly tracking service measuring corporate end-user satisfaction with desktop, Intel-based server, and laptop/notebook systems vendors. The fourth quarter study is based on the opinions of 389 IT managers at large U.S. corporations, from interviews conducted between mid-October 1999 and early January 2000. The principal shifts in the rankings this quarter involve Compaq moving up to second position for Intel server satisfaction, IBM reclaiming its number two position from Compaq in notebook satisfaction, and IBM moving up to a third position ranking in corporate desktops while Compaq moves down one level and Gateway falls from third to fifth position.

                 Sample   4Q Score    Rank   % Change 3Q99    % Change
                  Size                          Over 2Q99    4Q99 Over
                                                                  3Q99

Intel Servers:

Dell                56      88.89       1           +2.8%           0%
Compaq             189      87.09       2           -1.6%        +3.1%
Hewlett-Packard     51      86.10       3           +2.5%        -1.0%
IBM                 48      83.20       4           +0.8%        -1.0%

Desktops:

Dell               115      88.17       1           +2.1%           0%
Hewlett-Packard     56      83.73       2           +4.3%        -1.5%
IBM                 59      83.25       3           -0.6%        +2.8%
Compaq             110      82.69       4           +0.9%           0%
Gateway             43      80.96       5              0%        -2.8%

Notebook:

Dell               103      84.14       1           +0.8%           0%
IBM                108      81.40       2           -1.0%        +2.7%
Compaq              77      79.02       3           -2.2%        -1.9%
Toshiba             51      77.69       4              0%        +2.3%

The weighted customer satisfaction scores TBR uses as a means of ranking the systems vendors are based on a calculation where each satisfaction score for each attribute is weighted by the stated importance of each attribute. These are tallied up based on a scale of 100 points. Overall satisfaction and customer loyalty ratings are given the highest relative weights.

While we reported in the preceding quarter that Compaq (NYSE: CPQ) customers were having a variety of experiences with their Intel-based servers (some good; some bad), this quarter shows a much greater commonality of positive experience and, as a result, Compaq has regained its stature across the board in Intel server satisfaction, with particular gains noted in the areas of delivery time and service and support. Compaq's drop of one ranking position in both the desktop and notebook satisfaction ratings is primarily the result of increased competition from IBM. In both areas, Compaq's most serious weakness is its failure to meet market expectations regarding price/performance and cost of ownership. A common thread for Compaq this quarter is effectiveness of its delivery mechanism, which outshines all of its competitors this quarter, including Dell.

Dell (NASDAQ:DELL) customer satisfaction scores this quarter hold steady across all three form factors with a widening gap over its competitors for desktop satisfaction and a slightly narrowing gap regarding notebook satisfaction due to the increasing competitiveness of IBM. Dell is essentially unchallenged across all three form factors in the areas of technical support response, volume discounting, price/performance and cost of ownership. A potential new area of concern for Dell, as evidenced in all three form factors of the study this quarter, is a disappointment to its customers regarding delivery times in that increased volume demands have affected shipping schedules. Dell's notebook product reliability scores show some erosion this quarter resulting in a loss of its leadership position for this attribute in the current quarter.

Following two consecutive quarters of very competitive ratings, Gateway (NYSE:GTW) has fallen back to a trailing position in the corporate desktop customers' satisfaction ratings with erosion across most of the attribute areas this quarter. Gateway's areas of falling satisfaction this quarter include two historically vulnerable areas (technical support response and volume discounting) as well as some that may be less expected such as replacement parts availability, hardware reliability and performance, price/performance and cost of ownership. Several customers offered up the explanation that Gateway is having difficulty managing growth and transitions to corporate accounts.

Hewlett-Packard (NYSE:HWP) has essentially held onto its gains from the previous quarter when the vendor was cited as most improved. HP continues to be in the top tier for Intel server customer satisfaction and tends to be about on par with Compaq with the exception of out-of-box quality where HP's customers tend to rate their vendor as exceptional. In both desktops and Intel-based servers, Hewlett-Packard's scores for delivery time show a notable decline over previous quarters.

IBM (NYSE:IBM) enjoys a resurgence of support this quarter for desktop and notebook satisfaction, while its ratings for Intel-based servers remain essentially unchanged, that is, non-competitive and generally on a lower plane than those of its principal competitors. In the notebook satisfaction ratings, IBM has regained its number two position behind Dell with improvement across the board of attributes and significant gains in the areas of delivery time, product availability, global support, repair time and overall satisfaction. IBM is the superior vendor in terms of notebook hardware reliability and service and support.

Toshiba has recovered the bulk of its losses accumulated over the past several quarters, although Toshiba's satisfaction scores tend to run significantly lower than both Dell and IBM. While there have been subtle improvements for Toshiba across many of the attributes, the systems vendor remains most challenged in the areas of long-term reliability, replacement parts availability, cost of ownership, and volume discounting.

The complete study results are contained in TBR's Fourth Quarter 1999 Corporate IT Buying Behavior and Customer Satisfaction Study. The study represents an installed base of nearly two million systems and a purchase intent of over 500,000 systems. For vendors, distributors, large end users, and the investment community, this program has become the preeminent tactical tool for monitoring customer satisfaction from quarter to quarter. A customer satisfaction research program subscription, consisting of four quarterly reports, is available for $5,000 annually to interested parties through the contacts listed below.

Complete results available to accredited journalists.