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Technology Stocks : Dell Technologies Inc.
DELL 122.55+4.4%Nov 21 9:30 AM EST
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To: Jim Patterson who wrote (52658)7/20/1998 5:37:00 PM
From: Chuzzlewit  Read Replies (3) of 176387
 
Jim, I think your points are well taken. All industries go through a period of exceptional growth followed by a period of maturity and eventual decline. For those who think it can't happen here just think about the mainframe computer manufacturers of the 1960s.

Your point about the effects of management missteps is also well taken. Isn't this exactly what happened to AAPL, CPQ and IBM among others?

But there are significant points that I think have eluded your analysis. Dell is unique in many ways. Probably the single biggest item that sets it apart is that it isn't a tech company at all! It is an assembly company. It relies for the most part on technology developed by others. This is not to say that it doesn't have significant R&D programs. Just that the bulk of the technology is developed by others. A second item that you have neglected is that Dell is a distribution company.

The point behind these differences is that Dell is free to evolve in areas where its current competitors dare not look. Going back to your examples, you will see that one of the primary causes of the decline of those industries was market saturation. Without doubt the computer market will one day become saturated as the rate of innovation slows and the replacement cycle lengthens. Companies without flexibility will perish. What kind of flexibility does a superbly managed assembly distribution company have? In my opinion it is limitless. And that's what separates Dell from the pack.

TTFN,
CTC
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