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

To: stockman_scott who wrote (167608)	10/24/2001 2:50:39 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Scott - not a rosy picture. Here's how I see DELL responding to that market risk. DELL has taken a strategy of using their cost advantage to drive increased share. Their current model allows them to undercut the other guys with less pain. The long term value of that share, by itself, is questionable, but it does continue to build DELL's presence. So how does DELL "monetize" that market share advantage without exposing themselves to risk if the downturn continues, and without giving up any upside when a recovery happens? The answer is to use their current and future share gains as a vehicle to pull higher margin sales, through the kind of arrangements I described in my previous post. They in effect tax the high margin players like EMC for access to DELL's go to market capability, which improves DELL's overall revenue and profitability while helping them to target the areas that have been out of their reach - 4 way and 8 way server sales, complete enterprise infrastructure sales, and the like. As long as the market stays sour, they can use that mechanism to improve profitability. If the market turns they have several ways to either consolidate to take the profit directly, or enhance those arrangements to maintain leverage.