re 'extra $20k'
Dont confuse published list prices with what a large buyer will pay.
There is a story (supposedly true) much earlier in the Compaq thread, and of which I have heard a different but similar version much closer to hand, which goes like this. (I'll summarise)
On a big deal, Dell will bid below cost price if necessary to get the business. They will also guarantee the price for a certain time (say 6 months, because if you are buying say 20k computers, you are probably mot going to buy them all on day 1.
Over time, costs drop, so the Dell price creeps back into profitability, plus the Dell rep is speaking to the company. Maybe the 15k computers still awaiting delivery need some more memory? Or bigger discs? Or faster modems? Or the new model XYZ is a better deal and its only $75 more (But its $150 more profitable to Dell?) Whatever, Dell end up with profitable business via a loss-leading entry stage of the sales process.
And of course, Dells production model, which is by far the most efficient in the business, enables them to better undercut the competition, and get into profit quicker, and make more profit quicker when component prices drop.
Lastly, its not all about price, there are many intangibles which Dell would focus on in a big corporate deal.
JoeC |
