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Technology Stocks : Micron Only Forum

MU 252.40

+2.2%

Dec 9 3:59 PM EST

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To: hpeace who wrote (24440)	11/24/1997 8:28:00 PM
From: DavidG	Read Replies (2) of 53903

Steve, IMO the margin on CPQ PCs can be 25%. They use to be up around 35-40% before the prices started crashing. They are selling a perception of quality on the those low end PCs but no more quality than some other brand name systems..The consumer wants the warm feeling of having someone to go to or call when their system doesn't work...so they offer on site service and an attractive warranty...but there really is very little to go wrong in a PC. Individuals and companies can purchase extended warranties which cpq makes their real money on...and which in my opinion is the biggest rippoff. THE INTC chip is built to last forever..although it becomes obsolete in two years and probably the PCs are thrown away by the 5th year. All the other components have individual MFG warranties from 2-5 years. So what they really make their money on is their service contracts to companies and extended warranties to individuals over and above the margin profit at time of sale.. Not a bad deal, huh? DavidG

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