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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: HoodBuilder who wrote (17439)	2/15/1998 11:56:00 AM
From: Mohan Marette	Respond to of 97611

Michael: Your assumptions about CPQ is dead wrong as their product range is arguably one of the best in the industry,form low cost to the high-end servers and everything in between. Yes that includes $800.00 systems as well but not limited to it.May I suggest you do a bit more research on the company before making wild-ass assertions,as nothing could be farther from the truth.

To: HoodBuilder who wrote (17439)	2/15/1998 12:18:00 PM
From: Jack T. Pearson	Respond to of 97611

Michael, You have posed an interesting question. I will address it in terms of market share and margins. I believe Compaq is trying to gain market share--partly because it grows the company and partly because they don't want to loose out to Dell, HP, and IBM. This is difficult for a company that is already the market share leader by a factor of two. Apple is disappearing as a significant company because they chose margins over market share. They had no significant competitors for the Apple hardware and operating system. Such a choice may not be available to PC box makers because they have little besides price, quality, and service to distinguish them from their competitors. Basically, Compaq cannot afford to leave any stone unturned. Thus they have gone after every market nitch, from the top to the bottom, from business to the home market. Price is a ways to capture market share. So is service. That is why Compaq is into low cost PCs and why they are buying DEC. I don't think Compaq is giving PCs away. They are trading higher margins for market share. They have certainly been successful in getting this right in the past. They should be able to buy components at costs not above what their competitors pay, possibly significantly below. Their vulnerability is their costs for manufacturing, distribution, and service and their ability to respond quickly to market changes. I think they have done well so far, but as to the future, I am still searching for clues.

To: HoodBuilder who wrote (17439)	2/16/1998 9:42:00 AM
From: otter	Read Replies (2) \| Respond to of 97611

re: "we make up in volume what we loose on each machine". My opinion, only. Dell & GTW are not particularly targeting the first time buyer. There was - oh - more than a year ago, I think an article on just this subject, focusing on Gateway's strategy. Their price point target at the time was not much less than $1,800-$2,000 per system, and I doubt that this strategy has really changed. CPQ has a retail strategy that isn't modeled by the mail order houses. You won't see Dell or GTW in retail stores; and if you look at what you are actually receiving for your $800, it isn't a lot. My question (don't know the answer): How many people actually go into the store that is advertising an $800 system and walk out having spent only that much?