Ian, re Dell, Rudedog and a couple of other posters did a nice job of (trying to) analyze the Dell server cuts, on the Dell thread last night. I think they were almost as baffled after quite a few posts, in which they really built on each others information, as when they started. What Dell did is cut server prices across the board, including some which include Xeon CPU chips that are in short supply from Intel, and have not been reduced in cost. And, those Xeons are very expensive. It looks like Dell just erased all margin on those servers in taking them down 40+ percent. Rudedog and friends couldn't see enough other component cost reductions, of parts that go into those servers, to justify the server cuts and maintain some margin.
To me, Dell's action could be yet another indicator of a company struggling to make a quarter. And, if it clobbers margins, will they make it anyway? The other possibility is that Dell is falling much further behind the clear leader in that server space, Compaq. I think it's mostly the latter, but JMHO.
Tony |
