Hi Investor2; Some guesses...
Which company has the right factory line?
AAPL, HWP, IBM. Look for a company that already makes
really cheap stuff with no user serviceable parts.
Which company has the right market target segment?
Companies targeting that sub $1000 market are the ones to
go for. Does CPQ do this?
Which company has the right distribution?
Look for a company that sells through the usual distribution
channels for cheap electronics (i.e. VCRs, microwave ovens,
TVs, etc.) My guess is HWP, they sell a lot of cheap printers,
for example, but a lot of companies satisfy this, particularly
those based in the far east.
Which company produces systems on a chip?
The US companies are leaders in this. Look at the PC chip
houses (i.e. INTC and the dwarves). My bet would be IBM.
Which company is "the company to bet on for this technological
change?"
Over all, my guess is IBM.
DELL's big profit advantage is in a regime of quick falling
component prices. The advantage they posses is that of having
small inventory, and therefore small losses in inventory value.
I expect this regime to last far longer and prices to fall far
deeper than most people. For the short term, this is bullish
for DELL. But when the regime stabilizes, DELL will be at a
disadvantage to those who buy in bulk.
DELL bulls would suggest to you that having less inventory is
always an improvement. What a company really needs to do is
to produce a product as cheaply as possible, and that works.
Clearly, there is a balance on how much inventory (both work
in progress and completed goods) are optimal for a given company.
You always, always, always buy a part at a lower price if you
are willing to take larger quantities, with more lead time.
This effect will return to dominate the PC industry, just as it
has dominated it in the past. This will eliminate the advantage
of having lower inventory.
-- Carl |
