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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (135032)	6/29/1999 9:48:00 PM
From: George Wave	Respond to of 176387

Greg, Thanks for the article. The last paragraph really sums up the Free PC strategy. "Channel conflict is endemic to this area," said Roger Kay, another IDC analyst. "I don't think Compaq is in much of a position to argue," he added, noting that Compaq cannot abandon its retail partners. "The retailers are essentially saying, 'it's life or death for us--our margins are worse than thin,'" he explained." Sounds like the cast from the Titanic. Best regards, George Wave

To: Boplicity who wrote (135032)	6/29/1999 10:04:00 PM
From: JUJU1015	Read Replies (1) \| Respond to of 176387

Hello Greg, Off topic..... So, inquiring minds want to know would you be buying BBY? Thanks Hi to all Judith

To: Boplicity who wrote (135032)	6/30/1999 6:04:00 PM
From: Meathead	Read Replies (2) \| Respond to of 176387

Re: Best Buy tries new subsidized PC strategy. Greg, the popularity of the free/subsidized PC concept is strong. Dell is currently contemplating a strategy to compete in this space… or so they claim. I, like you believe that this shift will continue to occur (like the cellphone model) and gain popularity. But it will still be limited to certain consumer segments and HW classes IMO. It will be hampered by the cost of higher end hardware and more significantly, the growth of multiple access devices within the household. Re: With computer prices in a free fall, pundits have been predicting that the PC business would rapidly resemble the cell phone business, where hardware is given away or sold at a loss as a way to entice customers into monthly service contracts It doesn't sound like the pundits are thinking beyond the box and looking at the likely future of household computing. One major issue no one seems to be considering at the moment is what happens when access devices proliferate beyond a household owning just a single PC. If you have a household with multiple PC's, WebPads, SHD's and a myriad of other electronic devices enabled for Web access, you really only want to pay just a single monthly fee to an ISP. Much like cable today. One fee, as many TV's as you want, not an additional cable bill for every TV you purchase. Under the BB deal, your first PC is discounted by $400 and you sign a 3yr service contract with an ISP . How does that work with additional PC purchases? You would have to sign multiple contracts and pay multiple fees to get additional free or discounted PCs. As an example, 3yrs of Prodigy service will cost $567 or $15.75 a month. If you want a second PC, do you a) take the $400 rebate up front and increase your monthly payments to $31.50 and 3yr liability to $1134 or b) pay full price and keep your fees and liabilities fixed? Extend this concept out to include the many devices we'll be using in the future and you can see that it will be impossible to get all the hardware you desire free or discounted for a single, fixed, monthly ISP fee. Another trend that will limit the value of the ISP subsidized PC concept is home networking. A PC will be used as a gateway IP address server enabling multiple devices to simultaneously gain access utilizing just one ISP account. Translation: you pay one monthly fee (e.g. $20) and you can have an unlimited number of individual devices accessing the internet at the same time… even from remote locations. Here is a white paper. dell.com So, the longer term strategy behind the scaling of the subsidy model beyond first time buyer / single PC households is unclear. PC companies rushing out buy ISPs in order to give them a pricing advantage over their competitors may find this strategy backfiring in a few years as they realize they'll only be able to sell one subscription per household. Further HW sales into the same household won't benefit from the ISP subsidy. With this in mind, households will likely continue to embrace the current model of finding the best HW deals and the best ISP deal regardless of whether they come from the same vendor or not. This would relegate the ISP business of a HW vendor to being profitable on it's own merits… which it certainly can be, but how profitable relative to other business opportunities is the question in my mind. Back to the present. Currently, the $500 PC works well with FREE PC concept… it's more of a problem trying to give away PC's costing $1000 and up with the intent of recouping the HW cost through subscriber fees in any reasonable amount of time. BB's subsidized strategy that reduces the cost of the system is a good way to address this issue. But, a $1000 PC that you pay $600 for can't be called FREE… there goes the attention grabbing headline in the advertisement. Somehow, the consumer will figure out that what their getting is a really good deal on ISP service for a few years… nothing wrong with that really except for being locked in to one provider. And if you're not happy with the service….. Consumers who figure this out will exploit it to it's fullest. They can get their first cheap system from the FREE PC vendors and pay the monthly ISP fee. The second PC will likely not come from them, but likely be of higher quality from a vendor like Dell. The kids get the cheap PC, parents get the good PC, and every additional access device will be purchased from vendors who offer the best value for the HW without ISP bundling. The FREE PC vendor will be the ISP for the term of the contract. After that, the consumer can go elsewhere. If they do, the FREE PC company looses its bet. So, in the short term, there would appear to be some benefits for a PC company to acquire an ISP in terms of subsidizing a HW purchase and gaining a customer base for their ISP business… like Gateway and Earthlink. Longer term, I think they diverge again to being separate businesses entities relying on their own P&L as outlined above. I wonder why Dell chooses not to pursue buying an ISP outright and chooses to partner even though they could easily afford one? Is Dell looking ahead and seeing certain trends that make partnering smarter, or, does Gateway see something Dell has overlooked? MEATHEAD