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Technology Stocks : DELL vs. CPQ
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To: uproar who wrote ()10/25/1998 12:37:00 PM
From: Radders   of 9
 
New to this site so searching my way round, this subject is dear to my heart, so couldn't resist - Dell vs Reseller/Distributor model?

Dell is a great performing share and anyone who got into this 3/4 years is extremely happy, Compaq on the otherside have had their day interms of market outperformance. Casting your minds back Compaq launched themselves targeting IBM and Apple in a market that had massive potential for allcomers, Apple have all but disappeared (in the UK anyway) and IBM have spent 4 years rediscovering themselves. So who will win? Answer, In Europe the reseller. corporate IT is under pressure to reduce cost in all areas of the busines and initally the cost of the box is the first place people look, however is you believe the Gartner reports concerning TCO (Total Cost of Ownership) you will discover that the box represents only 17% of the ownership. Staff are hard to come by and when no real value is added by the manufacturer, companies are having to expose themselves to huge contract revenues (non tax deductable) to support the physical hardware (something that the reseller provides as part of the value add). I have been involved in many situations where orgainsations have chosen Dell but have had to switch back owing to financials, as Dell no longer have an edge over price I strongly believe that the love affair will end and soon.

Everybody wants someone to love but divorce is a messy business, its easy to sell something that people had netted a healthy return against but if and when the share price starts to reflex its true price then they could be in a huge amount of trouble.

DaveR
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