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Technology Stocks : Dell Technologies Inc.
DELL 119.21+5.3%11:41 AM EST
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To: Chuzzlewit who wrote (50776)7/11/1998 1:20:00 PM
From: rudedog  Read Replies (1) of 176387
 
Chuz -
The small box shop has a higher cost per component structure than Dell, and so will tend to use lower quality components to keep their costs down.

The white box vendors who sell in a retail or corporate environment are the high end of the business. Digging a little deeper into the lowest cost white box people, those closest to the 'gray box', the quality and source of the components is very different from the OEMs. When we think about the service and return policies of the big vendors, lots and lots of 'pretty good' parts come back from the field, are repaired and tested, and are then 'as good as new' (sort of). but they can't be sold as new, so they go into spares inventory. When those age a little and the spares requirements drop, they get blown out into the broader market. This creates a supply of technology that is about 2 years old, priced well below equivalent new components, sometimes as low as 25% of new. This is how one can find a $300 system which is roughly equivalent to the $900 systems from the majors.

I have no idea what the service implications of those systems are, but I suspect they end up at places where joe in the back room does the repair work and where the cost of ownership equation is not something anyone has ever thought about.

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