Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: nlam who wrote (21882)	3/14/1998 11:10:00 PM
From: Jack T. Pearson	Respond to of 97611

nlam, Thanks to the link to the moneytree article. These links are of great value to us all. Jack

To: nlam who wrote (21882)	3/15/1998 9:17:00 AM
From: Mike Gordon	Read Replies (1) \| Respond to of 97611

NLAM: You requested my thoughts on this well written article by Robert Metz. Ref: talks.com Please excuse the time it took to reply. I wanted to give more than "It's a good article". Metz's primary thrust is the fact that the EVA of DELL is considerably greater than CPQ. Bus 101 students would be quick to point out that this is the reason for Dell's success and subsequently incredible PE. IMHO, the EVA is a symptom of Dell's success. What Metz and many failed to understand is DELL recognized culture. Culture is defined as being able to understand the younger market which had confidence in basic computers and the ability of DELL to literally deliver an outstanding product through the mails. Many of these buyers were first time buyers and received their exposure through DP classes in college. Also know as the "X" generation they made a hobby out of computers. Therefore, Dell made progress through word of mouth advertising. Dell was a fad. Dell seized upon the opportunity by ensuring the customer was delighted at both point of purchase and after sale. (Customer Service) In essence, DELL would have been Chapter 7 candidate 25 years ago. Baby Boomers, on the other hand required a more traditional means of purchasing a computer. Many of these first time users were exposed to PCs as a result of work activities. And until the mass acceptance of the internet, most never saw a need for a home PC. Their kids, were probably the best sales people CPQ ever had. There was no way a Baby Boomer was going to order from the mails when he could go to SEARS and see a PB in person. CPQ provided price, quality, and service. Hence, a greater degree of sales to Baby Boomers via retail. So, if all of the above is true ( I stress, this is my personal analysis), the cost to provide goods and services is less in a direct sales mode Vs CPQ retail channels. CPQ is limited in their ability to compete with DELL in their BTO strategies because of the retail relationships already established. It would be difficult if not disastrous to try and compete with their distributors. The only way CPQ would have an effective BTO is to sell under a different name while possibly advertising a relationship with CPQ. Additionally, to establish quality BTO program, it will take considerable system resources which must be tailored to CPQ needs. Not a simple walk in the park. All is not lost for CPQ however. I believe CPQ will be a hit in Europe. Their culture is much like the Baby Boomer in the US. They are skeptical about BTO and mail deliveries. Being married to a European confirms this fact. In Europe, CPQ needs to exploit their core competencies. In summary, I think CPQs future will be assured if they can do the following: 1. Maintain quality and service in the <1K PC while reducing cost. 2. Establish a following for the <1K client who wants to upgrade. PCs are here to stay. Like a telephone, they will be the primary medium for communication in both voice and data. Billing is the next level. Companies are just beginning to bill via the internet. Look what AT&T has done along with incentives for internet billing. American businesses and banks will push this concept. Look at what brokers have done. Eventually, everyone who has a phone will now have a PC. My apologies to the thread and web mistress for the length of this post. Mike Gordon