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Technology Stocks : Dell Technologies Inc.

DELL 125.88

-1.6%

Dec 31 3:59 PM EST

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To: Doug Larson who wrote (34400)	3/15/1998 8:16:00 AM
From: qpd	Read Replies (1) of 176387

Overall response is "too many cooks" this new model has very little likelyhood to work profitably. CPQ/IBM/HP have tried a number of things to emulate DELL. Invested in their own BTO capacities, and remember CPQ attempts to buy GTW. In a way by doing this, these companies have accepted they are unable to compete on their own with DELL. Complicating a picture by adding another player and additional steps in the loop to compete with still same efficient DELL model? Consider what happens when a customer is buying a PC. Current picture is: DELL : Components from suppliers -> DELL -> BUILD -> SHIP to Customer 5 day shipment 7 days inventory 50 growth in profits and sales CPQ/IBM/HP: Components from suppliers -> CPQ/IBM/HP -> BUILD ->SHIP to Customer Varied shipment time Components from suppliers -> CPQ/IBM/HP -> BUILD -> Vendors (CHANNEL INVENTORY) HP 60 days CPQ 120 days IBM larger Under the current conditions, DELL's model is the best every one has tried to emulate with varying degree of success. ------------------------------------------------ Ingram intends to build BTO units for FIVE different companies who now build and sell their own brand names, both directly and through additional vendors. New picture: DELL operations will remain the same CPQ/IBM/HP: CPQ/IBM/HP order to INGRAM-> Components from suppliers -> INGRAM -> BUILD -> CPQ/IBM/HP -> SHIP to Customer Varied shipment time that is bound increase due to increase in number of loop steps. CPQ/IBM/HP order to INGRAM-> Components from suppliers -> INGRAM -> BUILD -> CPQ/IBM/HP -> SHIP to VENDORS ->PC sits on the shelf -> Customer shops and buys PC Under the new model, what a customer buys is an INGRAM PC with CPQ/IBM/HP brand names. Consider buying a car built by HUNDAI under the brand name Ford, GM, Toyota etc. Cost is bound increase as there is a new player in the picture and has to make a profit. Who is responsible for TECH and Customer support? What happens to all the investment CPQ/IBM/HP have already made in BTO models. Are they going to write off or sell at discount and loose more bottom line?

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