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Technology Stocks : Dell Technologies Inc.

DELL 120.60

+1.8%

3:59 PM EST

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To: Meathead who wrote (48290)	6/20/1998 1:18:00 PM
From: rudedog	Read Replies (2) of 176387

Meat - I thought we had already provided the tutorial on this, since the data is easily obtained. But let's run through it again. 1) Look at technology which is at 'state of the art'. Large configurations of these classes of systems will be about 10% of current purchase, driven by the business segment where any technical advantage turns into money (such as reducing design times for expensive talent). 2) Look at technology which is 12 to 18 months old. Technology which fits mainstream needs from this period will fill about 80% of current purchases, driven by the need to maintain touch with the mainstream of software and industry practice as constrained by the 5 year TCO. 3) look at older technology, more than 18 months back. Small configurations using this technology will be about 10% of current purchases, driven by the need to maintain consistency in older systems where the maintenance advantage of a homogeneous environment outweighs any technical advantage. This is driven by the economics of book value versus utility value and by the usage models. It has been true for a long time and it is true today. A change in industry ASP can move the whole curve a little but that is a minor secondary effect. The "266Mhz is all you need" policy is exactly equivalent to the "286 is all you need" policy of 1986. It was right for the volume segment at that time and it is right today. Outfits like Gartner make their money by driving tried and true policies. Can anyone point to a Gartner, Standish or other 'think group' report that ever suggested that a majority of business purchases should move up to state of the art in either hardware or software? Those boys are not in business to take chances, especially when there is no business justification to deviate from past practice.

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