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

To: Zhivago who wrote (23949)	4/5/1998 9:11:00 PM
From: FR1	Respond to of 97611

The low priced PC thing brings up a important point. I got a catalogue today from MEI/Micro with the following unit: 200 MHz 2.1 GB HD 32 MB ram (Cyrix like in your article) 24x CD Mini Tower Price: $599 Another unit was for sale at $499 I think we are starting to hit bottom here. Basically, box makers like CPQ will be selling good entry-level machines this year for $300 - $500. I think sales start to lose price sensitivity around this point. The important point this brings up is that if computers are going to become more of a inexpensive commodity, how are you going to get good profit? The answer is in value-added cradle to the grave handholding. In other words, which business will be the best at being able to take care of your units, insure immediate on-site fixes for your units, AND provide you with all the fundamental software you need to run your business (accounting programs, human resource programs, etc). Right now its only a IBM game. Peoplesoft charges outrageous prices for this kind of support (and they only do software). CPQ-DEC can make a killing here - it is a really fat market with almost no players and they are perfectly positioned to do it. Let me give you an example - as a small business person I really do not want to be tied down being a MIS director, payroll supervisor, human resources department, etc. etc. - I just want to be allowed to run my business! When I look for computer solutions, the low end accounting guys like PeachTree, Simply Accounting, etc. are very restrictive. No electronic credit card depositing, no tie in with a web site, etc - you can't even enter and track foreign address in these programs. PeopleSoft has recognized this and is now starting to offer the service of handling everything. When I heard this I called them up and they said they would be glad to do it but prices start in the hundreds of thousands of dollars!! If CPQ could have a entry level service along these lines they would have customers for life. Anyhow, I mention this because I see a lot of the expert critics asking what benefits could come from the DEC merger. They then go on to analyze the hardware distribution channels and show how there is little gain. None of the experts I have read think of the fact that as computers become more of a commodity you have to move to these more value added services which CPQ is only now positioned to do. I hope this does not escape CPQ's attention in the restructure.