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

To: GVTucker who wrote (149269)	12/14/1999 5:51:00 PM
From: Geoff Nunn	Respond to of 176387

GVT - excellent point! Dell management has shown great savvy IMO in its reluctance to push the company into areas where Dell enjoys little competitive advantage (actually, comparative advantage). It is not uncommon to see good firms ruin themselves by expanding into fields where they don't belong. Anyone who doubts that Dell management is keenly aware of the principle of comparative advantage should read (or reread) MSD's piece on virtual integration in Harvard Business Review a few years ago. Michael does an outstanding job explaining why the vertical integration model that worked for computer companies in the past doesn't work now. [IBM was vertically integrated in the '60s and '70s; curiously, CPQ has been moving that way today)] Geoff

To: GVTucker who wrote (149269)	12/14/1999 6:27:00 PM
From: Chuzzlewit	Respond to of 176387

GV, The problem faced by Dell is one of inevitably declining growth. Assuming that the PC market (including servers and webpcs) grows at a 15% annual rate, that rate must increasingly constrain Dell's growth as it gains market share. In order for Dell to grow beyond those constraints it must either migrate its offerings to other products, or it must create new products. Whatever these goods are, they must be consistent with its proven strengths (which I believe are sales and assembly). Dell's past strength - its reliance on technology developed by others -- is also its Achilles' heel because it precludes innovation. TTFN, CTC