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Technology Stocks : Dell Technologies Inc.
DELL 133.93-4.9%3:59 PM EST
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To: edamo who wrote (107231)3/4/1999 5:08:00 PM
From: Kenneth Aird  Read Replies (1) of 176387
 
Doesn't IBM outsource its PC manufacturing like most of the industry anyway? It seems to me the key is not in the manufacturing but in the distribution channel. Build to order is useless if you are going to sell through resellers. What are they going to do, keep custom configurations in stock? In an earlier post, Lew Gerstner admitted that IBM has "made their bed" with resellers. The key is in the direct relationship with the customer.

Dell preaches virtual integration. It means sharing infomation with your suppliers that could never be shared by a traditional company. As the prime supplier of key components like disk drives and memory, IBM will know a great deal about Dells sales and the configurations they are selling in real time. It is unheard of to give such information to a competitor, much less teach them how to do build to order, which I don't believe is as simple as it might seem. Ask Michelle Harris about Dells use of ERP software. The only conclusion I can come to is that IBM has set up a Chinese wall between the OEM organization that sells to Dell and the PC division, which is now treated as just another customer who must compete with Dell on their own merits and go out of business if they cannot. The alternative would be for IBM to buy Dell, but if they were going to do that, why not do it now? Dell will only get more expensive as time goes on. Besides, Michael would have to agree and I would be surprised if he did. When he started the business he told his parents he wanted to beat IBM, not be bought by them.

Ken
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