ALL: My apologies if this has already been posted. Food for thought in these "trying" times.
Subject: It's Not Compaq vs. Dell (Bear Stearns)
>
> Computer Week In Preview: March 2
> BEAR, STEARNS & CO. INC. EQUITY RESEARCH (Andy Neff)
>
> -----------------------------------------------------------------
> *** They Took Someone's Parking Space. While there is a high degree of
> anxiety about levels of channel inventory, we think that investors
> should be focusing on the larger picture: Compaq is continuing its
> strategy of leveraging its scale and balance sheet to gain market share
> through its aggressive product and pricing moves, which are designed to
> maintain its momentum. These moves mean that what some would call
> "stuffing the channel" may, in fact, be grousing by competitors that
> have lost share or shelf space to Compaq. At the same time, we think
> that the shift to "build to order" is progressing on new desktop product
> lines, but the overall business still involves the older methodology of
> discounts and other incentives, which provides a source of confusion to
> investors which compare this blended system to Dell's pure "build to
> order" model.
>
> It's Not Compaq Vs. Dell. And, while many focus on the issue of Compaq
> vs. Dell, we believe that this perspective also misses the point. For
> investors, the issue is not Compaq (with a global market share of 14%)
> or Dell (with a global share of 6%); it is that the major players
> gaining share from the second tier in the ongoing consolidation of the
> fragmented computer industry as we have discussed elsewhere. In fact,
> in 4Q97 (based on IDC's data), Compaq gained 3.6 share points from the
> year before, while Dell gained 1.8 share points (although Dell's
> percentage gain was greater) and H-P picked up 2.1 share points, while
> many second-tier vendors lost share. |
