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

To: Jack T. Pearson who wrote (44518)	5/22/1998 9:57:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 176388

Jack, I believe that if DELL designed its low end business model carefully that it could score big in the low end of the market. The indirect channels are at a real cost and quality disadvantage at the low end. This would have to be a separate business unit since it is dealing with a different market segment and customers with different needs.

To: Jack T. Pearson who wrote (44518)	5/22/1998 10:18:00 PM
From: Meathead	Respond to of 176388

This does qualify as thinking. You bring up good points. The problems associated with Dell being in the entry level PC market (a.k.a. sub-1000 or 1KPC) are not as much about profit as they are about the type of customer and preferred channel for this class of device. 1. The 1KPC today appeals almost exclusively to 1st time buyers or folks adding second PC's to the household (e.g. for the kids). This mainly represents the consumer segment who traditionally shop in the retail channel. 1st timers arent going to order over the internet. Dell does have very low cost offerings that classify as a 1KPC, problem is, there is not much of a direct market for these boxes. 2. Dell has no advantage in the retail channel and we know they wont go there... almost precisely why CPQ is agressively persuing this segment. 3. Corporate customers are not demanding entry level machines in sufficiently large quantities. They likely never will. They all use a push-down strategy when upgrading PC's. When they go to all the trouble to purchase PC's they buy leading edge which are deployed in the areas that will benefit the most. The machines being replaced are pushed down to the next level which still represents an upgrade... The oldest of machines (bottom of the barrell) are scrapped or donated (which costs the company for disposition). If the machines were bought from Dell, they will absorb the cost of removing the old machines... that's just one more piece of their TCO story that businesses LOVE!! Bottom Line: Strategically, the 1KPC is not a direct channel device mainly because it's consumer oriented. The 1KPC or $500 PC (whatever it becomes) will likely remain a consumer PC due to corporate purchasing and deployment strategies. The majority of consumers will probably always prefer walking into a store, touching and feeling the product, and walking out with it the same day (instant gratification). There is also a false sense of security in knowing you can take it back and chew out someone face to face if it's a turd. MEATHEAD