Fez:
Great article. What the analysts failed to realize is that there are 2 different markets: the cheapy PC's and the quality PC's.
Just like first time home buyers: there builders for these people. The house is small, the carpet is the lowest quality, lots of posatge stamp size, etc.
When these people move up they will buy bigger house, more quality, more options etc. The homebuilders for this market generally do not build startup houses.
Now we have e-machines and packardbell. Their computers are for the first time buyers of computers, maybe for their children, and maybe for accessing the internet (if you only want to spend $ 600 for a computer, would you be willing to spend $ 250/year for the internet?).
Some of these first time buyers will realize that they need more speed, larger storage, DVD, etc because among others the kids demand more from the computer as the games are more demanding for resources.
They will upgrade the computer, more savvy than before. They will not just pick pre-packaged computers, customed built etc. Where will they go? Dell and Gateway.
Dell 's market is not that first time buyer. Let e-machines type companies serve them. As a matter of fact let those companies supply bicycles with training wheels. Dell's market is the corporate and business users, servers etc, and for consumers who longer need training wheels. Kevin of Dell already said that Dell is not interested in that low PC, just like Dell is not interested in competing in the mousepad market.
How about that analysts? Sadly, those overeducated young graduates who work for wall street are more theoritical than practical.
paul |
