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

To: Jim Patterson who wrote (35075)	3/20/1998 4:04:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 176387

Jim, that's why DELL isn't in the sub-$1000 PC market. I think there's a BIG difference between a "low cost" DELL PC and a "low cost" CPQ PC...

To: Jim Patterson who wrote (35075)	3/20/1998 4:19:00 PM
From: David Harker	Read Replies (1) \| Respond to of 176387

Jim P. wrote: "David, Look at DELL's asp trend and their margin trend, There is a corrolation between the two." The fact that both lines trend together on a graph does not imply a causative relationship. Ie, ASP moving down does not necessarily cause margin to go down. The drop in component prices is a large factor in dropping ASP's in the entire industry, and Dell is choosing to be very competitive on price, intentionally reducing margin, but still making more $$ profit (total) due to higher units sold. This is ONE explanation for why these two lines on a graph could seemingly move together with no direct causative relationship - I'm not saying that this, for sure, is why that has happened in Dell's case. Just an example... You also wrote: "If you are correct, then that would mean that DELL makes higher margins on lower priced PC. We all know that High priced, high margin, servers offset low cost low margin PC's. Or am I wrong on that one too." You have extended what I said, adding a conclusion that I did not state, then acting is if I HAD stated it. Not a good tactic. Your statement is completely correct - I work at IBM and know, as does most of the world, that high-end computer products are more profitable than the rest of the product line, for any computer-related product line. My argument on Dell's ability to pass on Intel's price cut is one that applies to any range of a product line - it is just a generic example of a manufacturer being able to reduce price in line with a supplier who reduces prices. Dell's margins vary by product, of course, and I'm sure that their higher-end products have a higher-margin. All I'm saying it that regardless of which part of the product line you discuss, if a supplier drops price, the manufacturer can then drop price by the same $ amount, preserving the manufacturer's "$ per unit" profit. This is a generic statement that is applicable to any manufacturing operation.