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

To: Bilow who wrote (45862)	6/2/1998 9:14:00 AM
From: Meathead	Read Replies (4) \| Respond to of 176387

Carl, Take out the silicon and you still have copper, fiberglass, caps, resistors, inductors, headers, connectors, plastic casing, platters, heads, a tube, cables, sockets, switches etc. Gwenapp is right, the silicon content is small. About $100 in our cheap PC example. You can't deny that. For these things to get much cheaper, their physical makeup would have to change.. i.e. more integration. Re: But the parts of the computer that you admit in your post to being more expensive are mostly those parts that have high semiconductor content. Anybody who has ever assembled a high-end computer from components knows this. Incorrect. The highest priced items are the monitor and hard drive.. low semiconductor cost structure relative to the physical stuff. Even a DIMM's cost is not exclusively semiconductor based. There is a PWB you know. TV's are a bad example as they are fixed function devices. You cant upgrade sound, add more capacity etc. You can't load new software and change their usage model. They are truly commodities. As for autos, not only did they used to be expensive, they still are. The average american has to finance one for 5 years. Since 1970 at least, the price vs. average salary has increased. You get more for your money now but it still costs the average american about 75% of their yearly net pay to afford one. Autos are a bad example for your position. They bolster mine. Witness the popularity of the Yugo and other sub-10000 autos. How cheap can PC's go depending on consumers needs? A fully functional 486 based PC can be had for about $150, much less than you could manufacture it new for today. If you only want to surf the net, email etc. a set top box for $100 will do. If you want the latest OS and applications, you'll need a PC which is made up of much more than just silicon. MEATHEAD

To: Bilow who wrote (45862)	6/2/1998 9:49:00 AM
From: JRI	Read Replies (1) \| Respond to of 176387

Carl: A few of your points left me scratching my head..... <<But this is all a diversion from what underlies our true disagreement. The real question is what will tomorrow's consumer want in a PC. You think he will continue to want mid to high end machines. I believe he will be satisfied with cheap low end machines. <<The recent drops in ASPs suggest I am right. If ASPs go back up, I will admit I was wrong. But I don't see that happening yet. Instead I see prices continuing to drop.>> ASP's went up in March and April. Dell is quoted by Lehman as stating that ASP's are going up currently....Also, this depends on who's ASP's you are talking about....I guess CPQ's ASP's have gone down pretty significantly lately (and continue to do so)! _______________________________________ First of all, Dell sells the vast majority of their PC's to corporations (not consumer), well over 80%+........Needless to say, corporate needs are different from Buffy the 13 year old teenager.... Secondly, in the consumer market, not all computer buyers buy low-end, low-power, "cheapest possible" computer. Sure some do. Sure maybe most will. Remember this: These consumers have never been Dell's target/Dell would not be near the company (it is today) if these consumers were their target/This is CPQ's territory (and they can have it!)...Dell does not have the retail distribution in place..... But guess what...Dell doesn't care (Sure, Dell may offer a Celeron based model later this year, but rest assured, no one at Dell sees this market segment as the future of the company and/or any significant future profit vector).....But there is a healthy, existing, and growing market for consumers who want the latest technology, lots of speed, etc......These consumers are much less price-sensitive than the sub-1000 market.........Sure, it is smaller than thoseDell caters to this consumer market and does quite well... In closing, in one of your earlier posts, you kept make analogies to the car industry.........If you think about it, the car industry is not a good or relevant analogy (as a harbinger for disaster) for Dell and/or other computer makers.........We can discuss if you wish... Good luck with your investments.. What people are looking for in a PC is in some ways similar to what they are looking for in a car. Power, efficiency, performance, low cost, low maintenance. There was a time when all cars were expensive. When customers selected parts to get a car just like what they wanted. When there were 100s of car manufacturers, the vast majority of which were not vertically integrated, but instead bought engines, for instance, from other makes. Those times disappeared when industry managed to make a car with which customers were satisfied at a low price. The market then became a commodity, with relatively small sales at the luxury end. The makers that were not vertically integrated went bankrupt. A few luxury makes survived, but not for terribly long. I think the personal computer industry is beginning to make this same transition. I'm going to give another post after this one that will show more clearly how cheap computers can go, depending on what it is that the customer needs.