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

To: Mr. Aloha who wrote (44583)	5/23/1998 3:52:00 PM
From: Bilow	Respond to of 176387

Hi Mr. Aloha; Regarding those high priced personal computers. My ex's '486's SRAM battery went out and apparently so did the floppy drives, so I convinced her to get a new machine. A 166MHz Pentium was had for $500, with 8xCD, 16MB, 2GB, 3.5", phone connections, fax capability, etc. I threw her old IDE hard disk (128MB) and 5.25" floppy into the new machine and I am sure it will completely satisfy her needs for another 6 years. Probably the monitor will blow before then... But all she wants to run is a little word processing, and maybe someday hook up to the internet. On the other hand, her buddy bought a $3500 new machine. I always buy around $2000 machines, cause they play games better. Place I last worked at provided very minimal machines to typical employees. I screamed for 6 months and finally got a dual 300MHz Pro. They only gave it to me cause I was routing gate arrays and needed the processor speed. My observation right now is that software is not burning up the megabytes and megaflops as fast as they used to. As business needs become standardized and computer usage more predictable, computers will devolve to standard commodity machines, and very, very, very low prices. When I was a youth, the standard business machine, found in multiple quantities in every office, was a Selectric typewriter. Sure these are now obsolete, but there was a 20 (?) year period where that was the only thing businesses bought. Employees were expected to be expert with them and them alone. IBM made a lot of money building Selectric type writers, it was a very profitable business for a very long time. The design was protected by patents, and companies didn't trust their competitor's products. IBM had many, many years of high profits from that product line, and IBM stock went up. All this would be an argument for DELL's rosy future except that the patent (and copyright) protection for the new standard business machines is not now, and will not ever be in DELL's possession. Instead, this turf is now largely owned by software companies, in particular MSFT, and to a much smaller extent by INTC. This is why historically the box makers have sold at relatively low PEs, and DELL stock will return to PEs in the teens again. No monopoly, no pricing power, no decades long high profit stream. -- Carl P.S. I suppose I should give a prediction for when DELL returns to a P/E below 20. I think this will happen in the next 3 to 4 years.