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Technology Stocks : Dell Technologies Inc.
DELL 126.65+3.0%3:06 PM EST
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To: The Phoenix who wrote (64697)9/10/1998 2:33:00 PM
From: Chuzzlewit  Read Replies (1) of 176387
 
Gary, The point remains that this distribution flow/model is the only "barrier" DELL currently holds ...

I see you've come a long way in your thinking since you now acknowledge that a barrier indeed exists. The next step in your evolution will be to appreciate just how difficult it is to breach that barrier.

There is an interesting parallel in chemical thermodynamics. A reaction which involves a move from a high energy state to a low energy state may not occur because of an intervening energy barrier. The higher the barrier the more difficult it is for the reaction to occur. In order to get the reaction you require large amounts of externally supplied energy.

Dell's business model is the end result of the rection, but jettisoning distribution channels and establishing a new demand based infrastructure is the barrier. What company would be willing to rebuild its sales effort from scratch by pulling product from retailers shelves and distributor's warehouses? How long would it take them to rebuild their sales? How long would it take them to put into place an efficient ERP system? Which comes first, the infrastructure (JIT logistics management), or the jettisoning of the channels? Finally, how deep must the company's pockets be to make this transition?

TTFN,
CTC
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