To: jhg_in_kc who wrote (5520 ) 8/27/1999 12:07:00 PM From: Arrow Hd. Respond to
Comparing IBM and DELL may not may not have much value since they are very different companies. I would measure DELL against the other IBM compatible manufacturers and then measure the robustness of the PC business in general. Though IBM obviously sells PCs their model is different. They develop architecture for which they get paid intellectual property royalties, they have multiple distribution channels to manage, inventory systems that because they are a manufacturer can't be just-in-time like DELL can since they are basically an assembly operation that builds to order not build to plan, and so on. So any comparison could be misleading. Stick with DELL's market share, margins, general fundamentals, product positioning and the health of the PC industry as a whole, among other issues to consider. In general, I think they can do well next year once we get over the Y2K issues. 2000 will see an enormous push into E@Commerce, bandwidth solutions, networking, communications, enterprise and E@Commerce software all of which can drive the PC business. If you recall a previous post which highlighted a DELL miscue regarding a customer's E@Commerce requirement and how IBM stepped in to solution the needs and close the business you can see that they have holes in their strategy but the solution in my mind is not the Compaq strategy (buying DEC) to get services skills. To much indigestion. The strategy should be to expand into the E@Commerce software areas via alliances, partnering and small acquisitions that are immediately accretive with limited overlap to avoid write-downs. There is a lot of opportunity going forward for this space but it is not clear yet who will prevail. Certainly DELL has as good a shot as any at this point.
