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To: Meathead who wrote (25781)	12/19/1997 12:30:00 PM
From: Franco Battista	Respond to of 176387

Meathead, your last two posts are great and are what was sorely missing on this thread. Investors desperately need to look at all possibilities in order to calculate the risk/reward.

To: Meathead who wrote (25781)	12/19/1997 12:57:00 PM
From: jim kelley	Respond to of 176387

Meathead, It is clear that DELL is ~10 to 14% lower than CPQ on similar desktop systems off the web. The pricing on the notebooks is tighter but DELL has two advantages here. One is the small price advantage on similar systems and the other is their laptops are nicer than CPQ. I do not like the CPQ touchpad or keyboard. I also do not like their (lack of) service. The crux of CPQ's long term problem is having to pay two levels of distribution. If each gets 4-5% gross profit before taxes, it makes their product 8-10% less competitive. It also creates a pipeline that is around 6-8 weeks deep in product. This reduces product change flexibility, increases inventory charges and forces them to build to forecast. This probably adds another 4-5% in costs. CPQ risks a major disruption in their channel while they are trying to switch to the direct model. So they are proceeding in more manageable steps. Their manufacturing model is also less efficient and is based on the old build to forecast model. Regards, Jim Kelley