CPQ will be much better off by mergering with DEC.
The immediate benefit is DEC's worldwide customer base, the second immediate benefit is
the ALPHA CPU which is at least 2 years early than Merced. For the first time CPQ can build up its own high end computers , servers with its own CPUs, wih MSFT's support.
CPQ will expand its business into the enterprise computing world which has higher profit margin, both in hardwares and after service. While in the same time, DELL will continue
being limitted in the PC business. You can use direct sale model to sell PCs, but not
much complex systems for enterprise computing . So, the day the merger finalized is the day
CPQ formally get into the high end enterprise business. DEC is a company currently making
reasonable profit, and after restructuring , the profit margin will even be much higher with
more efficient operation. I always ask people what CPQ will be in five year without merging with DEC today, however , noone answer this question so far. If CPQ will be in a potential
crisis five years down the road without merging with DEC today, then today's decision is
a smart one. This will pave a way for long term sustaining growth. Without those, I am
kind of worry for DELL's investors. |
