Hi Ian,..Re:. Your doomsday scenario strikes me as highly unlikely
I'm guessing that the point Rudy is trying to make is that IBM, CPQ and HWP have significant alternative revenues, and therefore, could both participate and endure a protracted rotten price environment for the PCs. We've all speculated that Dell needs to either expand into the higher end enterprise arena or take some parallel path to alternative revenues. Preferably higher margin type. <g>
Just for a point, you might find the Q1 IBM report interesting, especially where revenues come from as well as margins associated with their software business.
Three months ended March 31,
Percent
1999 1998 Change
------- ------- -------
REVENUE
Hardware $8,584 $7,318 17.3%
Gross profit margin 27.2% 28.7%
Global Services 7,550 6,341 19.1%
Gross profit margin 26.3% 27.0%
Software 2,920 2,644 10.4%
Gross profit margin 81.0% 79.6%
Global Financing 705 719 -1.9%
Gross profit margin 55.9% 47.1%
Enterprise Investments/Other 558 596 -6.4%
Gross profit margin 32.6% 33.1%
TOTAL REVENUE 20,317 17,618 15.3%
GROSS PROFIT 7,258 6,450 12.5%
Gross profit margin 35.7% 36.6%
Rudy, please correct me if this assumption if wrong.
Cheers,
Lee
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