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Technology Stocks : Dell Technologies Inc.
DELL 133.78-0.1%3:59 PM EST
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To: edamo who wrote (118652)4/20/1999 1:17:00 AM
From: rudedog  Read Replies (2) of 176387
 
Ed -
I think Chuz has done an excellent job of detailing the issues surrounding CPQ's use of the channel - They basically need to perform a heart and lung operation on a running man. They need to build an infrastructure which can do configure to order at low cost, while at the same time shifting their distribution away from the indirect model which generates 50% of their revenue. The shift over to a revenue model where PCs play only a small part is the only way this can be accomplished without bloodshed, and as we have seen it is easier said than done.

As far as the "commodity" issue goes - PCs are less differentiated now than they were 5 or 10 years ago. DELL has made a great business by having good but not great products, but delivered with great quality, efficiency and as ordered by the customer. From this standpoint, commoditization affects them less than the other vendors - DELL's brand is associated more with the customer experience than the hardware features. DELL has done a great job of setting high expectations in this regard and delivering on them, and this brand identity can survive almost any shift in the underlying hardware configuration. It is also a brand which can be ported more easily to other products than a pure product play would do.

In some ways this is almost the Lexus play - build a good car with great quality, and then assure that every aspect of the ownership cycle from sales to service to eventual upgrade is in a class by itself. I own a Lexus and the best part of the ownership to me is the absolute absence of hassle or disappointment in dealing with the company.
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