Exhibits III and IV & V: Industry consolidation and China sales
Exhibit III: From the Wall Street Journal, Tuesday, September 8,1998....Page B9F
"Big PC Makers in Taiwan Post Sizeable Gains"
"....(There) has been a rise in the global market share of the four biggest U.S. computer makers- a trend that is having a big impact on Taiwan's PC industry. Compaq, IBM, Dell, and Hewlett-Packard controlled 38% of the world PC market in the second quarter, up from 33% a year earlier, according to IDG."
(my note: BIG BARRIER TO COMPETITIVE ENTRY) "The increasing heft of the world's biggest PC selllers leads them to look for suppliers that can handle commensurately big orders.....The industry is consolidating globally".
(Your commentary): Anyone can copy Dell's model
(My commentary): Looks like the barriers to competition are getting greater, not easier
Additional note: Other than Dell, the two largest direct computer manufacturers/distributors in the world are Gateway and Micron...
I think you would agree that of all the companies with the possibility of copying Dell's success and model (and its effeciency), it would be these two....
Note 1: Both have a decreased presence in the large corporate sales arena (Dell's largest market). Gateway tried last year, got their lunch eaten, and is now trying to regroup....Micron's CEO, Joel Kirschner, an ex-Dell guy, as he became CEO in June.....one of his first orders of business was to announce that Micron was withdrawing from the large corporate marketplace.....Here is a guy that probably knows Dell inside and out.......would know all the tricks to the model....and yet, his first order of business is to run and hide in the large corporate market...
Conclusion: Without knowing anything else, Dell must be extremely difficult to compete against in the large corporate space.....Evidence presented here (and elsewhere on the Dell thread in recent weeks) would point to the fact that it is becoming MORE DIFFICULT to compete against Dell, not less...
Now, if Gateway and Micron can't/won't compete against Dell (strength)...you are stating that someone/some company, out of the blue, will be willing to do so.......Please let us know how this should occur....
(In another post, we can address IBM, HP, and Compaq's efforts....)
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Exhibit IV: China PC sales....
Your contention: China's economy is falling apart
My contention: China's PC sales are growing at a rapid rate
The Economist, August 22-28......Y2K and China
"There are currently 10 million PC's in China, and sales are increasing at 50% per year"
My summary: China PC sales are strong.....If you still doubt about the future, go read the recent Fortune cover story on Andy Grove's trip to China (came out about 3 weeks ago).....It is indisputable that PC sales in China are going to be huge.
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