Dell, ASP, and PII price drop.
Jim P. wrote:
"If DELL cuts their high end, that is anything with a 333 in it, by $200 / per 333 in the box, Won't that lower their overall ASP ?
What this does to CPQ is irevelent.
Lets talk about how it impacts DELL's bottom line."
If Dell's costs to build a PII 333mhz drop by $200, and they
cut price by $200, passing all the Intel price drop on to their
customers, they still make the same $ amount per box. ASP does
not directly matter!
Assume Dell spent $1500 building a PII 333mhz box, including
buying parts, paying assemblers, etc, and that they added $150
profit, selling it for $1650. (this is all 'made up' figures).
Now assume Intel drops the cpu price by $200. Now Dell's cost
is $1300 for same box, so they add $150 profit and sell it
for $1450. They are now competing EXCELLENTLY on price, since
competition paid the old, higher cpu price (due to huge inventories)
PLUS dell still makes the same $150 per box!! ASP is meaningless,
the profit margin per machine is what matters! |
