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Technology Stocks : IBM
IBM 302.75+0.3%Dec 3 3:59 PM EST
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To: dav who wrote (4853)3/26/1999 10:29:00 AM
From: Arrow Hd.  Read Replies (2) of 8218
 
Dav, the concept behind OEM is based upon the assumption that as a logo'd vendor you will never want to capture 100% of the market due to the price attrition suffered once you go beyond the law of diminishing returns. The remaining market will be captured by your competitors so if you can sell as much as you can to these competitors as a vendor you will now get your share and a piece of their share which is about as much as you can ever expect to get in a competitive market. further, having your competitors rely on you for technology parts creates a dependency that indirectly protects against price wars since as the OEM you control a piece of the cost of goods sold equation and this limits the deep discounting ability of your competition. So the OEM concept plays well when it is true incremental business and not in lieu of your own logo'd products. Hope this helps.
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