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

To: jim kelley who wrote (39034)	4/26/1998 6:42:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

I agree we are at an inflection point but don't think it is direct vs indirect, I think it is full range vs targeted. The full range players are HWP, CPQ, IBM. Those companies can all offer everything from handheld to mainframe class (HWP is maybe a little weak on the very high end). They all do significant engineering, own the patents, designs, and processes for pretty much everything they sell, and have significant service components, which make up an increasing share of revenue. Their strength is in being able to offer total solutions, and in offering much more complete, end to end support to both customers and partners. The other class is clearly led by Dell and also includes Gateway and the smaller Wintel vendors. These companies are characterized by a focus on excellence of execution and very tight analysis of their business model, their solution to both growth and profitablity is to be the most efficient machine for turning customer needs into shipped products. They also do not attempt to do full range support or product offerings, instead they concentrate on picking the highest growth and margin segments and doing those perfectly. Dell in particular is focused on high end commercial to the virtual exclusion of consumer, low end, handheld, set top, etc. Likewise they have midrange servers but nothing designed to compete with Himalaya, AS400, SP2, T500, S390. The business seems to be polarizing around these two models, with everyone else getting squeezed out. Sun has some of the attributes of the full range players but does not offer anything like the range of products of the big 3 - no mainframe class products and clearly nothing below workstations. They are getting squeezed hard on the low end by the Wintel vendors, and can't get up fast enough in the high end, largely because they have no service business. I think Sun has missed their opportunity and will be the apple of the next decade - loyal and diehard sun users but little new business and a declining revenue base. I see a situation in the next 18-24 months where 4 companies (IBM, CPQ, HWP and Dell) dominate the computer landscape about as completely as MSFT and Intel dominate their markets. I don't see gateway surviving as a separate entity. I see Dell consolidating and dominating the nimble, segment-focused model, remaining light by leveraging everyone - Intel and MSFT for engineering, suppliers for inventory and cash management, customer awareness to eliminate the channel. Meanwhile CPQ, HWP and IBM will be working to redefine what the key market - corporate buyers - think is required of a vendor, and using their engineering and services clout to keep the target moving. In this scenario it is entirely possible for Dell to continue rapid growth for several years but MSD will need to be very clever to avoid a cul-de-sac from the full range players. Dell may be facing the hard choice of diverting some of their energy into a course to avoid the trap in 2001, at the expense of growth and profitability now. That is essentially the choice CPQ had in 1996 and they made the hard choice. IMO they have turned the corner and are now well positioned to maintain against or even dominate the other full service players. If Dell moves in that direction it will be good news long term but a good time to either put that stock under the mattress or shift to a higher growth vehicle short term. If they continue with present practices then I believe we will have a great ride for another year or two but then a hard stop. JMHO...

To: jim kelley who wrote (39034)	4/27/1998 1:10:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Jim, I know you asked some time ago if I had unit estimates for this quarter. I much prefer to rely on you and people like you, because you are so much more knowledgeable about the market trends than am I. I will just sit here and profit from your thinking! You, Gabriel, Bachman, Meathead, Lee, Sig, and many others (if I missed your name don't get upset, I'm just tired) have added so much information that it's easy to be lazy. Anyway, this is my way of saying thanks! TTFN, CTC