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Technology Stocks : Dell Technologies Inc.

DELL 123.51

+0.9%

3:42 PM EST

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To: MichaelW who wrote (45258)	5/28/1998 5:18:00 PM
From: AlanH	Read Replies (2) of 176387

Box prices are coming down because component prices are coming down, and CPQ must cut prices to move over supply. Box prices are moving in the same direction as components (due to excess component capacity), but not at the same rate. CPQ is buying market share at targeted segments, while DELL scrambles to assemble a server story. Guess where the market's going? Ironically, a delay in NT5.x might assist DELL. This is one of those factors beyond DELL's control. (Are you reading, MEATHEAD?) Such a delay could diminish CPQ's dramatic advantage in the server arena. Several folks have stated that MDell chooses his battles. The server battle is unavoidable. While everyone points to CPQ and HWP inventory gluts, there are other dynamics at play. These guys aren't slugging it out to maintain low-end marketshare. Rather than assume that DELL competitors are habitually ineffective, consider that a transition is under way. BTW, price erosion does not benefit DELL -- even if COGS is at parity. As unit sales increases, a diminishing returns curve arises for BTO.

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