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Non-Tech : Ingram Micro

IM 38.89

0.0%

Dec 13 4:00 PM EST

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To: Tim Karpinski who wrote (144)	5/1/1997 7:33:00 PM
From: Scott Patrick Adams	of 576

Alot of it has to do with price. Dell claims that taking out the middle man allows them to sell at lower prices and it seems alot of corporate accounts believe them. That is the precepition, I don't think that is the reality. I know Dell makes a lot less quaility equipment that say Compaq HP and NEC do. What I think is the biggest differance is that Dell does not build anything until it is sold. Another dirty little secret is the Channel is actually already doing the final assemply for Dell. i.e MicroAge IM TechData Vanstar. The channel to a certain point is shooting themselves in the foot but the profits are good. Dell turns their inventory 30 times a year Compaq is around 17. The reason is Compaq currently can not build to order and with that comes dramatic costs. Price protection with the Channel every time Intel lowers the price of CPU's Compaq (really everyone not just Compaq) has to rebate the cost difference for their exsisting inventorys in the Channel. Also everytime Intel comes out with a new CPU everyone has to lower the prices of the old stuff to get it to move. It also seems that every time someone wants something like two GB disks that the Channel has the three's or the one's in stock. So currently when Compaq builds PC's they do it in batches. 10k of one particular model today and 10k of another model tommarrow. What Dell does is build the machine after its sold this away their are no problems with inventory or having the wrong thing in inventory. It also allows Dell to move very fast to new CPU's and Disk and other options. Everybody is moving to this type of build to order system and not just PC manufactures. The channel (IM MicroAge Techdata) is going to the large manufactures as not only a distribution point but to actually do the final assembly. In other words, Compaq HP IBM and NEC don't send us fully configured systems. Send us bare bone systems no CPU no Hard disk no memory and we build them as we get the orders just the way the client wants them. I think Compaq is in a difficult situation and what they (Pfihffer) really needs to do here is keep a clear head and not let quartly Dell sales scare them off. The Channel is ready and able to help manufactures move to this type of system. IBM has already certified IM, HP will soon and Compaq does not seem to have a clear direction. I think if Compaq had their way they would like to keep their resellers and have a direct sales force like the Dell model - To the resellers this means Compaq will be competing with them and the margins are going to get even lower. They will not do this they will simply sell agianst Compaq just like they sell agianst Dell now. Sorry this is so long. SPA

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