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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (153)	3/15/1998 12:58:00 PM
From: China Trader	Respond to of 2578

Ramsey, As I recalled.... when my son bought a Dell thru internet, there were questions pertaining to corporate accounts vs consumers vs educational institutions, so I assume the order fulfillment process at Dell is the same for all customers. Hence its BTO model works for consumers as well as corporate accounts. my educated guess is the sales to major accounts for Dell and Compaq and IBM are the same, thru company account execs. Hence the selling cost are the same. But the order fulfillment process for IBM and Compaq are thru the resellers, hence the additional cost. hui

To: Ramsey Su who wrote (153)	3/15/1998 2:48:00 PM
From: Mohan Marette	Respond to of 2578

Ramsey: So here you are,I was wondering. Listen, here is a link which might answer some of your questions,I think. Message 3699479

To: Ramsey Su who wrote (153)	3/15/1998 3:34:00 PM
From: XoFruitCake	Read Replies (1) \| Respond to of 2578

Ramsey, I think the BTO combine with JIT model allow Dell to control part inventory a lot better, collect customer's money up front, and lower inventory cost. When the cost of component drop, the JIT portion of the BTO work very well since it allow Dell to move to a new component very fast (e.g. if this week 32x CD rom cost only $1 more than 24x CDRom, but the customer is willing to pay $10 more, then Dell can switch to the new CDrom faster than the conventional PC maker with no JIT). Collecting customer's money up front can be a big help in the profit margin. Imagine that COMPAQ ships a big load of PC to Compusa but they won't pay for the shipment until 2 or 3 months later. The financial cost of carrying this invoice can take away 2 to 3 % of the profit margin. It is not clear if Dell allow invoice payment for big customers. The lower inventory cost really is associated with the JIT manufacture process since the vendors are carrying the parts. I would argued that BTO model work much better than standard assembly line when 1)a lot of individual order that require customization, 2) fast changing component, 3) fast dropping component price. However, when I look at the sub-$1000 PC, I really don't see anyone who want to change the system configuration. And the component price are stablizing (e.g. CD Rom, memory, Disk drive). Only monitor is dropping more than the norm. CPU are control by the Intel and AMD and they are staying the course for their quarterly price cut. anyway, this is one person's opinion. Hope that help. mw