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Technology Stocks : Dell Technologies Inc.

DELL 122.55

+4.4%

Nov 21 9:30 AM EST

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To: JRI who wrote (146215)	11/1/1999 10:40:00 AM
From: rudedog	Read Replies (4) of 176387

John - Good post, but I disagree with some of the details... Look at how Dell's margin has risen over the last 2/3 yrs... It looks to me like it has been essentially flat at about 23% give or take a point, for a long time. Neither getting better nor getting worse. Also, I think you vastly underestimate the damage Dell's direct model has done, is doing to the rest of the industry... An axiom of the "church of DELL" is that industry trends are a result of DELL's direct model. But as far back as 1994, the trend in the PC business was clear and it was not as a result of DELL's direct model. DELL was not a major force in 1994. It was Intel and the increasing grip they had on overall chipset and PC engineering that was driving the trend. That was the beginning of the hardware specifications Intel drove through MSFT which had the effect of "leveling the playing field". One could argue that DELL was a proxy for Intel's game plan but hardly that the direct model drove the shift in the PC marketplace. I think it would be more accurate to say that of all the major players, only DELL drove a business model which could thrive in the new environment that Intel was creating. And the close relationship between Andy Grove and MSD had a lot to do with that... I am not arguing with the results, and I agree that DELL should see decreasing margin pressure going forward. I Also agree that DELL differentiates in the marketplace on "customer experience". That is a real differentiation, hard to achieve, and currently out of the reach of DELL's competition. I just disagree that the direct model changed the industry. I think instead that it enabled DELL to thrive in an environment that weakened the competition.

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