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Technology Stocks : PC Sector Round Table -- Ignore unavailable to you. Want to Upgrade?

To: Yogi - Paul who wrote (61)	3/20/1998 7:40:00 AM
From: Pierre-X	Read Replies (1) \| Respond to of 2025

Re: Falling prices; Oversupply From the same article: ...IBM is seeking to reverse stagnant market share and Compaq is struggling to deal with surplus inventories of unsold machines, all while growth in corporate demand for systems appears to be slackening. Can Dell remain immune? That depends mostly on where this business is on the spectrum of switching costs (aka "path dependency".) Is the PC business more like that of networking routers, with high switching costs and strong brand loyalty rewarding market leaders like Cisco disproportionately, or is it more like that of disk drives and DRAM, with relatively low switching costs, where competitive advantage is almost totally a matter of cost structure? I would put PCs toward the HDD side of that spectrum. Dell as the apparent low cost producer will have an easier time of it than the others but there WILL be a negative impact. The simple fact is, if you're selling computers, and your competitors start slashing prices to move inventory, you're going to feel it. Another factor working against them is the softening overall demand cited in the article. Cisco has posted a remarkable marathon series of sequential gains, partly because of ever-increasing demand in their sector. Dell may be just as good a company as Cisco but against the backdrop of weakening demand, can they avoid repercussions? I think not. I think I'm going to peruse their last quarterlies to see if I can puzzle out the precise factors contributing to Dell's remarkable performance until now. An understanding there will be essential to developing a worthwhile opinion about Dell's near term performance prospects ... God bless, PX