Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (7755)	7/14/1999 9:19:00 AM
From: porcupine --''''>	Respond to of 78486

[GM struggles against Texas dealers' resistance to "DELL" model] "Texas throws a wrench in GM's online plans" By Kim Girard Staff Writer, CNET News.com July 7, 1999, 1:50 p.m. PT Auto giant General Motor's plan to sell used cars and trucks in Houston via the Web has hit a stop sign. As reported in this morning's Houston Chronicle, the Texas department of transportation denied Detroit-based GM's application for a license to sell used cars and trucks in Texas. Regulators cited a new law that strengthens a prohibition against manufacturers having an ownership interest in local dealerships. The transportation department will give GM a chance to appeal the ruling, though regulators say chances of overturning the decision are slim, the paper reported. For GM, the ruling will bar the opening of its first online-linked used-vehicle store, which was planned within the next two weeks, according to GM spokesman Donn Walker. Through the new GM DriverSite program, consumers were supposed to be able to search online from a database of select used cars that are returned to GM dealers after leases terminate. After picking a car, potential buyers were to head to the Houston-based GM DriverSite store to test-drive the car. DriverSite is not related to GM BuyPower, the company's other online initiative for marketing its new vehicles. Houston was chosen as a test site for a planned national DriverSite program, which GM intends to use to help sell its used vehicles, Walker said. GM chose Houston because it has a huge used-car market, and its population is technologically savvy, he added. Asked why GM didn't get regulatory approval before building the Houston store, he said, "No one should underestimate government bureaucracies, and how long it takes to get things done." He continued, "DriverSite was and hopefully still will be how we market and sell used cars." "I am fairly confident that this will become a reality," he said. GM officials did not comment on whether the company planned to appeal the decision. James McQuivey, analyst at Forrester Research said dealer franchise laws in Texas are particularly stringent. GM could face two choices: create a subsidiary that could sell the used cars or set up a used car superstore in which the automaker would hold a 49-percent stake, McQuivey said. "Basically GM could possibly rearchitect this thing so they're not the owner of the used car dealership themselves," McQuivey said. He said other companies, including Hertz and Ford (at Fordpreowned.com), have managed to set up online sites to sell used cars. Ford, which is testing its program in four cities, asks that customers pay $300 to order a vehicle, which is delivered to a nearby dealership, where a dealer makes the sale and takes a commission.

To: jeffbas who wrote (7755)	7/14/1999 11:08:00 AM
From: Michael & B.Anne	Read Replies (1) \| Respond to of 78486

Cause seems unrelated to effect on predicted decline in chip earnings. ... Am I missing something here? IMO perhaps yes Until we have a major technology insertion in the form of very fast communications bandwidth ... e.g., fast cable across the country or fiber , current cpu speeds are fast enough (within PC's) for a) anything coming in over the "wire" b) all current sw applications (not really all: flight sims (games) and simulations could use more MIPs -- but they are hardly large markets.) So there is no trading up ... (any of you need a 500 Mhertz CPU?) and therefore future marketing efforts require expanding the base -- selling existing and new products to new people sell current products -- -- -- selling new products to existing customers -- -- -- to existing customers (easiest "cash cows") - -- -- (best growth position) selling current products -- -- -- selling new products to new found customers - -- -- to new customers (mrk & sales cost more - -- -- the dreams of which IPO's are made given that the market is saturated for existing customers you must expand in the harder (more costly) new customer sectors. -- where in the computer industry making money (in these expansion sectors) requires a growth rate (historically) of 30+/yr merely to offset sales and manufacturing start up costs.) Further (as Intel), you must do this with a product that costs less each passing day and against a re emerging competition that has neither the need nor the desire to make the same margins required of you. Further, you have history against you. No one has ever been able to move their organizations as fast as the decline line required. I give witness to the demise of Digital (DEC) and the near demise of IBM (re branded as a service company) And if the history of computing is insufficient. Consider the advent of previous "civilization changing" technologies .. airplanes, rail, autos .. and refer to the comments of no less an authority than Buffett on their lessons and the similarities to today. Finally you have to fight against god (whatever that means) -- in the world of the future computers will always cost less (CPU functions can be replicated today in protein molecules) and bandwidth will be free. regards