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Technology Stocks : Compaq
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To: hpeace who wrote (9797)11/28/1997 8:59:00 PM
From: Meathead  Read Replies (1) of 97611
 
steve - you know Dell can't compete here. Their business model
is not conducive to be able to go head to head with Compaq, HP
etc. at the low end. Competeing here requires a strong presence
in the retail channel... first time buyers need to touch and
feel before they buy.

I think todays market is rapidly splitting into many distinct segments, it's quickly becoming a very different business
than it was in 88-90 and that's the real issue. Dell's strategy
and reasoning for avoiding the low end is rock solid, whether
or not they've shot themselves in the foot will take a few more quarters to find out. Keep in mind however that so far, Dell has been able to enter a segment late after it has had time to mature a little, and quickly become one of the top suppliers.... but not through the retail channel.


I think Dell's decision to ingnore this segment is good for
both Dell and Compaq. The opportunities
in the market segments Dell serves are growing faster
than they are able to keep up with. This fact alone would
be a good enough reason not to divert resources towards
highly competetive lower margin products.

Besides, they are going after Gateway's business...
home, midrange to highend direct buying power users.
Bad news for Gateway and everybody else, more good news
for Compaq and Dell.

MEATHEAD
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