Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 217.91

+0.9%

Dec 5 9:30 AM EST

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To: HammerHead who wrote (886)	7/15/2000 10:04:28 PM
From: Bill Jackson	Read Replies (1) of 275872

Robert, dell grew by what is popularly called "disintermediation", removing the intermediary. All the others had channels of wholesale distribution that fed retail distribution and that fed the clients. As one expects the retailers wanted 20-25+% markup and the wholeslaers wanted 10-12+% markup. These could often reach 45% or so in certain product lines a few years back. Now this has been squeezed by dell and gateway, the leaders in the direct model. Dell now has a build to oder direct model. You order....they make it from parts fully customised. I expect they have standard sets coming along the line that they add ot or subtract from. In addition all dell machines snap together with interlocking parts and very few screws so final assembly is easily done by relatively unskilled workers. IBM, Compaq showed too much loyalty to their channels of distribution and they got eaten alive. dell had a much lower cost, much lower inventory, no dead end models to be cleared out at a huge discount, no lag to market to fill the channels, and so on. When the dell model came out of the water they should have embraced it fully and completely and dumped their channel partners. They did not do thia until far too late and they lost huge amounts of market share as the clung to their dead duck channel partners in the mistaken belief that they were the royal road to the corporate 500. not so. The corporate 500 have bean counters and they assess assorted offers and inspect the total cost of ownership and dell has made huge inroads there. It used to be imposssible to get data from IBM/Compaq etc in the way of drivers....Dell gave them away and IBM/Compaq used them as a profit point. They call, you sell, you make a buck. So Dell has won heart and mind from all levels. It is true that the screwdriver shops with their standar parts can beat dell in most areas, with the exception of bundled software. So if you get a SD shop system with no OS or other apps you can beat Dell by 25% or more, few corporatiosn buy that way. It is mainly geeks and local small times VARs that stay alive with the SD shops. One by product on the Microsoft lawsuit will be a level grounf for SD shops in Winxx. Right now the Dells and other biggies pay 50% of what they small shops pay. Soon(~1 year) they will pay alomst he same price. bill

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