Dave; Think of someone riding a sphere rolling over uncertain terrain, as long as he stays on top he is safe. Dells skill is that of riding this bounding ball. If he falls once too often(and he has fallen before) he is done. Now of course he has some money under his belt. What gets me is his inaction re takeovers. He has the share values to build a large corporation by paper acquisistions, even Apple could be bought up !!.
If he lets his share price fall he will lose that chance. After Christmas when blood will be flowing in the Wintel streets you will see Dell tumble, because by then there will be several new players in the direct make to client system. Some, like Compaq, will not do well, as they will be hampered by loyalties to their distribution base(to do direct you must burn that bridge, that dell does not have) All those who attempt to keep distribution ties will fail in the direct mode, as they are not compatible. HP will see this and go direct on it.s computers, and will keep the distibution chain with the printers, scanners etc, and I expect HP to be the most successful.
Dell may survive with the company viable, but with share price in tatters as margins fall with this added competition. I expect Dell to buy AMD?(is it free of major controls?), as he will then be able to survive the price onslaught, and at the same time give AMD share it needs for it's latest products. The NECs, ASTs, Packard Bells and others will be hit hard. Surprisingly the screwdriver shops will survive as they have lower costs than even Dell, as they have the ISA standard and everyone and their dog making fit together parts. You can buy a Wintel case and power supply for $25, and a keyboard (membrane) for $10. And both are good and reliable. 1.44 drives are under $20, and hard drives are now well under 10 cents per meg and memory is still dropping with the 64 Meg crossover due in November. The large companies cannot get the stuff any cheaper than the local screwdriver shop can, as the production push makes the makers of all the ISA parts s sell goods as fast as they make them just to survive. I expect web TV to hit dsektop sales this Christmas, causing a massive pileup and late winte/spring/summer bankruptcies of unprecedented proportions, bringing and end to this Bull market, and ushering in a recession.
DOOM and GLOOM. Will it happen??, who knows??m whats your scenario??
In this milieu Apple must make way and gather steam. Jobs will have problems, as he has many special parts at higher cost than Wintel parts. This coupled with the price drops will make it hard for Apple to seem to be a good value. We all know it works well, but we also know that fact has been ignored as price beats value every time(notice all the dollar stores selling Taiwan crap??). In money this is known as Greshams law, a bad currency drives out good. Same with computers, expensive are driven out by cheap as many people buy with no knowledge just to satisfy the gifting urge.
Bill |
