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

To: Venkie who wrote (25354)	12/16/1997 3:13:00 PM
From: BUYandHOLD	Read Replies (1) \| Respond to of 176387

Venk: Iam not a bear either . Fact DELL is my biggest holding but we feel it is healthy to look over the proverbial shouder. Check this out. Charles. December 13, 1997, TechWeb News -------------------------------------------------------------------------------- Has Dell Lost Its Pricing Edge? ByCraig Zarley and Christina Torode The party is over. The price delta between the channel's offerings and Dell Computer's has all but vanished, blunting the direct vendor's momentum in commercial accounts. The startling turnaround has long been predicted, but it comes much sooner than expected. Channel executives expected the momentum shift to take hold by midyear 1998. But a "win at all costs" attitude by indirect vendors Compaq Computer Corp., IBM Corp. and Hewlett-Packard Co., coupled with cost savings realized from channel assembly and build-to-order strategies, has pushed the timetable ahead. As a result of the pricing parity, the channel and its vendor partners have outdueled Dell in recent weeks to win several major bids including Compaq's wins at General Motors Corp., Procter & Gamble Co., Halliburton Co. and Georgia Pacific Corp., said channel and vendor sources. IBM, for its part, beat Dell at Major League Baseball (CRN, Oct. 20), among other accounts. And HP just unseated Dell as the desktop standard at Delta Air Lines, channel sources said. "HP's, IBM's and Compaq's prices are either right on top or 5 percent below Dell's. All the vendors are becoming very aggressive, and they are winning business back from Dell," said Mark Bradley, vice president of hardware strategy at MicroAge Inc., Tempe, Ariz. John McKenna, president and chief executive of Entex Information Services Inc., Rye Brook, N.Y., said, "Our vendors are responding with competitive pricing that takes the advantage away from Dell. . . . Pricing has been the momentum for Dell." An internal Compaq analysis of how 14 models of its Deskpro 2000, 4000 and 6000 systems stacked up against comparable Dell systems showed street prices for Compaq as of last week averaged 1 percent less than Dell's. But Dell Chairman and Chief Executive Michael Dell challenged the pricing analysis. "I would challenge the question. It sort of assumes the price delta against Dell has been trimmed, and I'm not convinced it has," Dell said. However, Compaq stood by its numbers. "This is not with just one isolated SKU, but basically across the entire desktop product line where we have been able to eliminate what was once the sacred cow of the direct channel--that they were at more competitive prices than the indirect channel," said Michael Takemura, Compaq's product manager, North American desktop marketing. All vendors, including Dell, said street prices from the indirect vendors and list prices from direct vendors are not the same as those quoted in competitive bid situations. Nevertheless, Dell and other direct vendors have used those published numbers to shore up the perception that their prices were lower, according to channel and vendor executives. Because of the special bidding practices for large-account deals, Jacques Clay, vice president and general manager of HP's Extended Desktop Business Unit, Personal Systems Group, said HP never has been at a pricing disadvantage against Dell in big deals. But street pricing is now in parity with Dell and shows that any cost efficiencies gained from supply chain re-engineering both from HP and the channel are being applied to lower prices, he said. And IBM said savings realized from its new Advanced Fulfillment Initiative, with its emphasis on channel assembly, is the reason for its more aggressive pricing. techweb.com