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

To: Meathead who wrote (44339)	5/22/1998 11:34:00 AM
From: Rich Young	Read Replies (1) \| Respond to of 176387

Meathead, your analysis and conclusions are 100% correct, IMO, based on what I see happening here where I work. Every time I walk through the warehouse, for the last six months, I see PALLETS of Dell boxes. We are completely upgrading and standardizing our computing base so as to REDUCE administration and transition costs. No computer with less than a 90Mhz Pentium will be allowed on our network. As new machines come out, our developers get new machines and the old ones trickle down to users with less need for speed. Also, the postulates some are putting forth here that businesses will go for the lowest-cost option are not true. If the low-cost provider one quarter is Dell, then HP, then Compaq, no one is going to jump from one to the other to save a few bucks up front when it means they have to keep retraining their techs on a new machine and hire more techs to maintain them all. Most businesses, even those with 50 employees, will choose a vendor and stick with them until price, dependability or service become major issues, because of the volume discounts they get and hassles and costs involved with changing. Your point about the up-front cost is 1000% correct. Dell simply keeps their customers coming back for more. BTW, I saw a commercial on CNN Headline last night for the 400Mhz Dell and it was pretty cool. At $2399, I found myself saying "that's incredible! All that machine for $2400 bucks!". That's the $70 million ad campaign at work and it's NOT aimed at corporate users. People are finding themselves with a lot more money in their pockets these days and are opting for lasting value in their purchases, so I believe there IS a large consumer market for these machines as well as the sub-K "throw-aways". Finally, the beginning of the home PC boom (1994?) is far enough behind us that many of those at the beginning of the buying wave (like myself with a 486/66) are now ready to upgrade and the wave will continue to roll. A year from now there will be even more home users ready to upgrade and two years from now there will be even more. Well, I didn't mean to ramble on that long but I've been reading a lot of this opinion and had to throw in my own. Just can't help myself sometimes. Rich

To: Meathead who wrote (44339)	5/22/1998 1:40:00 PM
From: Mr. Aloha	Read Replies (1) \| Respond to of 176387

You're assuming companies upgrade frequently. With the lower prices over the last year companies have been replacing the old 486 66, and low end Pentium's. I don't think you'll find that many employees with 166 or 200Mhz machines complaining about speed unless you're talking graphic artists, engineers. All I'm saying is, every industry has a cycle. Have we pasted the pinnacle of the PC cycle and entered a slower growth phase? The market seems to have some concerns about PC sales right now. So if the market is slowing for PC sales as we are hearing, how will DELL stay ahead? They say server business. If that doesn't work or if they have delays, you'll have the opportunity to buy low again. Aloha

To: Meathead who wrote (44339)	5/22/1998 1:45:00 PM
From: JRI	Respond to of 176387

Preach, baby, preach! It is simply amazing to scroll back thru the messages every day and read your posts (where you clearly display a superior knowledge to most of us, bulls and bears, concerning the corporate computing decision-making process) vs. our (off and on) resident bears who can't even begin to adaquately comment about the fundamentals of the PC industry and/or a corporate balance sheet... I greatly appreciate your efforts; I've learned a lot reading your posts....Thnx.

To: Meathead who wrote (44339)	5/22/1998 2:34:00 PM
From: Chuzzlewit	Read Replies (3) \| Respond to of 176387

Meathead, that was a great post. The the annualized cost differential is the key criterion for the choice of machine. Let me tweak your numbers a bit to take into account the cost of capital (I am a financial analyst after all, so I can't resist!). Clearly, your analysis is correct because of the one-time charge associated with the installation of the machines. Since the administrative costs are the same they are irrelevant to the analysis. Ignoring the administrative costs and calculating the annuitized first costs of the machine supports your conclusion. This cheaper machine costs $220.31 more per workstation per year when the cost of money is included in the calculation. Thanks again for a great post! TTFN, CTC

To: Meathead who wrote (44339)	5/22/1998 2:42:00 PM
From: Jim Patterson	Read Replies (2) \| Respond to of 176387

RE: Now do you understand why Dell does'nt target the individual consumer as heavily as corporations? Meathead, Did you happen to notice that the north American Corporate desktop segment of dell's business, that I think you are referencing here, was the weakest area of growth in the Americas ? Yes that is correct, The biggest chunk of DELL's business, the North American Corporate Desktop grew at a paltry 40%, well below the company's 55% average. Looks to me like some of us might just have the makings of an argument on this one after all. RE: <<<Right this moment, companies are purchasing 400Mhz systems. Dell will sell more today than they did just yesterday. The ASP's and margins are extremely healthy on these systems and that goes directly to the bottom line>>>> I would like to add to this, the cost of a 400 chip is going to start to come down from an already low introductory price faster than any new processor ever. That means that DELL, despite the speed with wich they can transistion to these, will have a shorter period in which they will achieve peak margins ect. from the machine. For your cost analysis model, Why not wait another 6 months and get the 400 machine for $1,899 and expect it to last for 4 1/2 years, heck, on a 100 million upgrade, I am sure management won't mind streaching that to an even 5 years. There I just saved you company half a million dollars. Also in your model, on the second upgrade you spread cost and instalation over 2 years. This is inflating your numbers a little. And the next upgrade may have a lifespan of greater than 5 years. We won't know until then. Jim