Chuzz- A few points...
Agreed that Dell will do well selling "commodities".....I like the idea of selling software and periphrials via the Website....logical extention...not too far from the core......I don't know what internal projections of rev/earnings growth would be in this segment, but it could be a very lucretive addition indeed (with little fixed cost)....It appears that the Net is the great commoditizer...who else (would benefit the most profitably but) the leanest, meanest PC company is this space...
Briefly read some of an editorial about Amazon in Red Herring written by Perkins (of (sp?) Caufield, Perkins, etc...VC firm for Amazon
and others)....One of Perkins' points was that E-commerce was where its at on the Net...that all destination sites are trying to get there...and that Amazon's real value is in its great information gathering ability and (personalized) data about its customers.... and its ability to market (other) items to their customers as a result (books, in other words, is not the answer)...that Amazon is the (perhaps) the next generation portal...
Well, applying that analogy to Dell, I feel certain Dell would be among the leaders in knowing their customers inside/out...this will position them well in the battle for Web mindshare....
So, if Perkins theory is right....if anyone is going to be among/join the giants of the Net, it will be companies with profiles like Amazon...and I would argue, Dell compares well here....(without getting into what this future might mean in revs./earnings)
I think an important point that I haven't seen raised....we all were concerned with how Dell could continue at a most-amazing hyper-rate to hire workers..The report noted that Dell hs had to hire significantly less numbers last quarter due to the (growing use) of the Web....And, to think, use of the web is only in its infancy...Importantly, businesses are using it more and more now....wow, what a powerful driver (driving down costs, saving time) for Dell while the competition maintain the indirect channel (and its costs)...
Also, I don't remember the exact statistic, but MD says Dell saves $ 30-50 for every web site visit (vs. a call)...Also, a nice (down) driver in costs...
At some point, at the rate of workers Dell was hiring, quality and/or growth probably would have taken a hit...The (rapid adoption of the Web) makes this scenario (much?) less likely...
Also, with the doubling of manufacturing capacity this past year, I gotta believe that (with slower manufacturing facility growth this year) this will allow Dell to focus even more on extending the direct model, driving further operational effeciencies, and even improve great quality a notch (up), etc....I gotta believe that some attention was divided (from execution) with all the building distractions... |
