SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Dell's Daytraders Decision Site
DELL 127.92+0.4%3:59 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Eddie Kim who wrote (449)7/27/1997 9:22:00 PM
From: jim kelley   of 1124
 
Eddie,

Re: Manufacturing costs

The following is my opinion:

It is not easy to determine which company has the lowest manufacturing costs. Because they have different product mixes.
As a rough estimate it appears that their manufacturing costs
are the same. However, Their other "operating costs" are different.
As a percentage of revenues CPQ is about 12% while DELL's are
9%. DELL wins by about 3%.

However, to the customer CPQ's machines are 12-15% more expensive not including local sales tax. This is because the channel
must markup the machine in order to make their money. Thus the
channel is actually CPQ's customer. The end user is DELL's customer.

As long as CPQ has retail and OEM channels, the end user customer will experience higher prices.

So CPQ can sell their machines at or below cost to their channels
to squeeze DELL out. Or it can squeeze their channels to accept
much lower profit margins. This is all in order to get a more DELL price competitive product. I believe they have opted to squeeze their
channels dry of profit. This may result in a revolt of the channel.

In the meantime, rumor has it that CPQ is trying to create its own
version of the Direct Model.

All DELL has to do is keep increasing its efficiencies and
innovating on its direct model. Hence, DELL has a great focus.

If I were CPQ, I would focus on getting the first time customers and
try to compete with DELL on the experienced customers.

Jim K.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News