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

To: jbn3 who wrote (36913)	4/8/1998 1:39:00 PM
From: rudedog	Respond to of 176387

Good analysis. In fact in some cases Dell does not take ownership of components until the machine ships (OS software is like this) and in other cases not until the machine is received by the customer (monitors and a few other components). This is one of the goals of CPQ's ODM, they want to get suppliers to retain ownership of components until the last possible moment. In some cases CPQ will NEVER own the components, they pass through the reseller. This is another reason for CPQ to have the channel do installation of CPUs, this is an expensive component and if CPQ can avoid price protection it will save them a lot of money. Dell has refined this model more than anyone but there are other ways to skin the cat. Long term SOMEBODY is holding that inventory and inevitably that gets passed along. One of the reasons Dell currently has higher prices on some components is because the suppliers have to hold the inventory. CPQ gets lower prices but has to carry both raw materials and finished goods inventory. Dell's method looks like it's a little cheaper overall just in inventory cost vs price, not to mention no price protection (contra-revenue) allowances.