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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: MichaelW who wrote (34964)	3/19/1998 9:00:00 PM
From: rudedog	Respond to of 176387

My point exactly. Intel said as much in their release - they will be speeding up the pricing action, those with the lowest inventory win. Maybe MSD had a talk with andy...

To: MichaelW who wrote (34964)	3/19/1998 9:12:00 PM
From: jbn3	Read Replies (1) \| Respond to of 176387

I think you are right. The price cuts on the Pentium II should work to DELL's advantage. Imagine that you are shopping for a new computer, and you see all the advertising and hype about the bargains on CPQ and IBM -- and you do get a lot of computer for a very nice price... (when I think of my Commodore 64...) But you happen to be savvy enough to understand that a) these are no longer cutting edge, but have been left behind in the dust of the technology stampede; b) they possess limited upgrade capability c) they probably won't run many of the neato-keen stuff of tomorrow. So you are torn between the advantages (good, serviceable machine at an economical price) and the disadvantages (virtually obsolete, doubtful service). If all you really need is a word-processor and spreadsheet manager, they are probably more than adequate. But, if DELL can offer you a machine at a somewhat higher--but reduced--price, and which is cutting edge, fully upgradeable, will probably run nearly all applications for the next couple of years, and comes with a dynamite service guarantee... And there is the matter of bragging rights ("I got a steal on my '95 Cougar" vice "Hey, let me tell you 'bout my new maseratti!") DELLish, 3

To: MichaelW who wrote (34964)	3/19/1998 9:34:00 PM
From: jbn3	Read Replies (3) \| Respond to of 176387

Intel's lower prices, Part II I think it puts DELL in the catbird seat. DELL now has added pricing flexibility -- it can either enjoy higher margins for a period, or reduce prices immediately to pressure the competition -- but it is DELL's choice!! We know that CPQ, HWP, and IBM are striving to reduce some excess, primarily outdated, inventory. If DELL forces them to now cut prices on their upper models, then their margins are again reduced on their current stock, and the improved price on higher end models may make it even more difficult to reduce their bloat. I think the current situation limns in capital letters and red ink the inherent advantage of the JIT assembly over the channel. 1) If a corporation using the traditional mode miscalculates demand, such as CPQ obviously did, it may take them several quarters to unload the excess inventory, and it may be impossible to do so at a break-even point. 2) This effect becomes much more acute in a period of sharply falling component prices, because your whole product line is stagnant and subject to wildly decreasing margin levels. 3) Now, IF your competition is in the same boat, it's one thing. But when your main competition is not only NOT subject to these problems, but actually benefits from them to increase pressure on you, I think it is fair to say that "You're paddling a leaky canoe in a piranha infested river!" Very DELLish, 3.