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To: steve h who wrote (50144)	3/8/1998 3:09:00 AM
From: posthumousone	Respond to of 186894

With Compaq's dealership strategy, can they ever implement a BTO system that is similar to Dell's? Having computers sitting in CompUSAs, Circuit citys, Best Buys, Radio Shacks, plus other electronic and computer superstores does not seem conducive to BTO.>>> found out today cpq will be running a few pilot BTO programs of out of Office Depot.

To: steve h who wrote (50144)	3/8/1998 1:09:00 PM
From: Paul Engel	Read Replies (3) \| Respond to of 186894

steve h - Re: "With Compaq's dealership strategy, can they ever implement a BTO system that is similar to Dell's?" Clearly, no. Compaq will have to get rid of dealers and go completely direct. They also use VARs for their high end servers. As long as they have "middlemen" that they must support with a profit for the middlemen, Compaq cannot do what Dell does. Re: "..the difference between Dell and gateway or micron's build strategy?" The underlying difference is in Dell's historic emphasis on direct corporate sales - that is, concentrating on corporate and business customers. These customers usually order PCs in fairly large quantities, so Dell's volume level tended to be higher. Because of this higher volume level, they became more proficient at handling the build-to-order strategy - getting bulk levels of components form disparate suppliers (CPUs,, chassis, cables, power supplies, motherboards, etc.) all in the same place at the same time. Thus, they became very proficient at executing this type of business model. Their volume ordering gives Dell greater command from their suppliers - they demand and get better delivery times, volume discounts, payment schedules, etc. I haven't studied Dell's balance sheet at all, but I would imagine that they can buy components with 30 to 60 day payment schedule, assemble systems, ship systems, and bill these systems, collecting payments and earning interest on the payments BEFORE they even pay for the components that go into the systems. This type of CASH FLOW brings a smile to a Warren Buffett type investor! Micron and Gateway tended never to have the same corporate emphasis (although Gateway is making good strides) and so they tended to have customers in the onesy-twosy category. Gateway seems to be making decent strides, but they do have periodic hiccups. Paul