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

To: Satyr who wrote (23833)	4/2/1998 11:47:00 PM
From: Prophet	Respond to of 97611

Satyr, you are assuming that CPQ is not going to realize additional economies of scale by reducing price. Chances are they will gain significant market share and most likely make the money on volume and volume cost reductions. Don't forget the big reduction costs in inventory. Big ticket items (high priced PC) can became a very expensive proposition when they sit in a warehouse collecting dust and and becoming obsolete. Low priced PCs will move fast. Don't forget the most expensive part of a PC is the CPU. CPQ would probably get better margins out of selling a PC with a $150 CPU than one with a $800 CPU - not to mention all the expensive components that have to be used to take advantage of the high end CPU. Also, don't forget there are a lot of people out there that cannot afford a $2000 PC, but would by $1000 PC. So, in my opinion, CPQ's move to aggressively market to the low is an excellent strategy that would yield positive results on both market share and profits.