3Com Limits Palm V, IIIx Distribution

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March 08, 1999 (12:00 AM EST)

With demand strong and supply short, 3Com and its distributors are restricting allocation of the recently released Palm V and Palm IIIx to select retailers -- and online stores aren't making the cut.

3Com recently sent a note to key distributors telling them which retailers should -- and should not -- receive the new palmtop devices during the supply shortage.

Sources briefed on the matter said CDW, Insight Direct, Micro Warehouse, Future Shop, Computer Town, and Tops are among the retailers approved for allocation from distributors. Meanwhile, Multiple Zones International, NECX, the Good Guys, and online retailers are out of the loop, sources said.

One online retailer said 3Com's "zero allocation list" for Web stores is unfair.

"The list says to give top priority to the preferred accounts, and those accounts on the zero allocation lists will get no product until the restriction is lifted," said the source, who added he has taken more than 100 pre-orders from customers for the Palm V, but can't get one through distribution. "No Internet retailers will move any [Palm V and Palm IIIx models]."

Yet online stores may sell every other Palm product. Buy.com, for example, sells the older Palm III and PalmPilot Pro models, and the full roster of accessories for the Palm V, including the Palm V modem.

Santa Clara, Calif.-based 3Com has a direct sales relationship with several national chains, including CompUSA, Best Buy, and Office Depot. Although 3Com officials said they are making the new palmtops available to their preferred accounts directly, many brick-and-mortar retailers appear on the zero allocation list sent to distributors, including Best Buy, Staples, Fry's Electronics, the Good Guys, Circuit City, and "practically every Internet reseller on the planet," said a source, who requested anonymity.

3Com acknowledged it has set in motion an allocation plan with distributors, but denied Internet retailers or others were being unfairly treated. Officials said all retailers will have access to product once the shortage ends.

"We're not doing authorization of resellers, online or not," one 3Com official said. "There is a situation in which demand far outstrips supply, so we're doing a strategic allocation. As the supply-demand situation eases, more people will have access to them."