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INTC 35.53-1.1%Nov 14 3:59 PM EST
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To: Harry Landsiedel who wrote (500)6/25/1997 9:15:00 PM
From: Frodo Baxter   of 990
 
Compaq has taken their eyes off the ball. The history of technological entrenchment is to get a lock in the high demand, low margin business and then move upstream. Microsoft has done it. Intel has done it. Compaq wants to do it. But they will fail because they're vulnerable in the desktop market as long as they have a higher cost structure than the Dells and Gateways of the world. Compaq has refused to go direct because they know that will cannabalize their own business with resellers. Dell and Gateway will be happy to eat their lunch.

All this talk about service, I say phttpt. Support personnel are easily commoditized. Manufacturing and distribution efficiencies resulting in lower operational costs in a high volume environment... now those are real barriers to entry.

Of course, Compaq can yield the desktop market, and become even more like IBM. This is not a compliment.
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