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

To: Father E. who wrote (40984)	5/8/1998 1:58:00 PM
From: JRI	Read Replies (3) \| Respond to of 176387

<< exactly my point why the Japanese have the same advantage and are using their time tested strategy of LOWERING PRICES to increase market share while Dell is doing the time tested stupid thing of keeping the prices up or not competing with them. What happened in the car industry in the 70's could happen in computers in the 00's. Isn't Toshiba ranked in the top five spots in laptops?>> What a poor analogy! The U.S. automakers got killed by the Japanese in the 70's for several reasons: 1. The Japanese produced a better quality product at a lower cost. (while the U.S. car makers were notoriously ineffecient) 2. The Japanese led industry innovation in cost management, administration, distribution and manufacturing. 3. The U.S. companies owned 90, 85, 80 % of the U.S. market, and were unable and/or unwilling to think differently about cost management, administration, distribution, marketing, and manufacturing. U.S. auto companies were led by fat, lazy management who thought U.S. auto companies were invunerable to competition. In most ways, Dell is more like the Japanese car makers of the 70's than all others in the industry: 1. Dell has the most effecient business model in the industry 2. Dell has led (and continues to lead) industry innovation in cost management administration, distribution, and product manufacturing. Dell produces the best quality products in the industry at the lowest cost. Dell's products are consistently rated as good or better than any others in the industry in quality, customer service, TCO... 3. Dell owns a little over 7% of the world PC marketshare. (this leaves plenty, 93%, of marketshare in play....) Dell is constantly "pushing the envelope" on its business model in all respects; MDell and his team are as hungry/hungrier as any in the industry. An earlier post of yours seems to want to compare MDell's (and management's confidence) about its future prospects to the conceit of the U.S. automakers of the 70's. There is a huge difference in the two (which I think is rather clear). Unlike the Japanese, Dell does not subscribe to "the marketshare at all costs argument". In fact, one of the big reasons why many Asian countries are in the trouble (that they are in) is that they adopted a "low price/marketshare at all costs" strategy which has failed them miserably in recent times..........Leaving many companies with large market leadership in unprofitable businesses (Can you hear me Compaq?, ie., low cost PC's)...Dell is smart to not play this game, and, given their business model, Dell COULD EASILY PLAY THIS GAME, and still make some money (although less than with the current model)........ I could continue, but let's just agree that your analogy is not relevant..

To: Father E. who wrote (40984)	5/8/1998 7:05:00 PM
From: Geoff Nunn	Respond to of 176387

With all due respect, that ISN'T your point. Correct me if I'm wrong, your contention is that because of the weaker yen, Japanese PCs should become cheaper when priced in dollars, relative to PCs made in the U.S. While that argument is superficially correct, it is wrong for reasons spelled out by Jack Pearson. I would suggest you reread his post. You are correct to recognize that the yen's appreciation against other Asian currencies has lowered component prices to Japanese boxmakers. Yet the dollar has risen even more than the yen against these currencies. On components purchased outside their own country, costs to Japanese boxmakers have risen relative to their U.S. counterparts. In this respect they have lost ground and are less competitive than before. The depreciation of the yen against the dollar helps offset this somewhat, but only on the Japanese value- added portion of the PC. When you combine these two aspects of the currency realignments, it's unclear who has gained overall, the U.S. boxmakers or the Japanese. One would need more info to address that.