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.

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

To: Sig who wrote (144560)	10/14/1999 9:52:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

sig - Dell is oriented to eliminate the service business for their product by producing non-failing items/systems That just does not work economically. Getting an additional 9 of reliability increases the price by a factor of 5. Neither DELL nor anyone else in the business can produce a product which is significantly more reliable than the accepted standard without pricing themselves out of the market. But more importantly, this has nothing to do with fixing broken PCs. These services are system design and configuration professional services of the type IBM Global services and CPQ services provide. The steps you point out are a great way to reduce DELL's "back end" support costs but not part of the services discussion. I also agree that quite obviously, DELL has made the decision to go for the hardware sales. By bringing in a strong service partner they become credible for the high end server sales that they need to maintain margin and ASP. That program has been ramping more slowly than needed, which has resulted in both margin and ASP pressure. DELL's move into the consumer market will make that problem worse without an offset and they just can't let that happen - thus the service link with IBM. But I regard that as "firefighting" - they have traded a high margin business outside of their "core" (services) for a high margin business which fits their business model, infrastructure and expertise (higher-end servers). But only 3 months ago I thought they were going for both markets. I don't know what internal issues kept them from executing on their "roll your own" services initiative, but they know a lot more about what they can and can not do than I do. If they really could not get the services business going the way they wanted, then the current strategy is the best to maintain growth in the key enterprise sector. My discussion was not intended to bash DELL management's decisions - they are doing a great job of recovering from issues they had no control over (EMC buying DG) and re-aligning their services to not miss the HW opportunity. But Kemble's over the top claims about huge services growth just don't have much to do with DELL given MSD's recent statements. I thought MSD was as usual very clear about where they are going and why. They are not going into the services business. They are going to leverage that from IBM. They are going to concentrate on what they do best - build and deliver great hardware. Take another look at Kemble's post and re-read MSD's recent statements and you will see what I mean.