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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Don Westermeyer who wrote (17451)2/16/1999 3:38:00 PM
From: BelowTheCrowd  Read Replies (2) of 18691
 
Don,

In general that's true. The nice thing about DELL is that they've avoided the "low end" of the market where all the price cutting is leading to declining revenues even with unit sales up.

In other words, they've carved out a nice niche in the piece of the market where unit sales and dollar sales are BOTH up. Most of the other boxmakers are taking it on the chin in the high-volume, low-price segments of the market.

1998 was unique in a few other ways too:

* A good chunk of the selling season slowed essentially to zero when everybody started waiting for Win98 and corporate IT types started doing their Win95, Win98, NT comparisions. Won't happen again in '99.

* The uncertainty over the final release dates and hardware specs for NT 5.0 (now Win 2000) had a lot of corporate IT types waiting on the sidelines to figure out what was going on. By the time the timeframe became clear, it was too late in most fiscal years for much buying. Again, shouldn't be an issue in '99. Most PCs shipping are pretty much Win2000 compliant which removes much of the concern.

* Asia was a fairly big issue in 1998. Not so much for Dell, but definitely for others.

In short, I'm not certain that 1998 wasn't an aberration rather than the beginning of a downtrend. Of course, one datapoint isn't enough to prove it either way.

mg
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