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

To: Chuzzlewit who wrote (47061)	6/10/1998 3:13:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176388

Chuz - The channel does more than warehouse in this model, they also do configuration, test, and in some cases service as well. If you are suggesting that CPQ can lean on the channel to take more inventory than the channel wants, that's probably true but no different than in the past. It is up to CPQ to control their inventory. The elimination of price protection and end of quarter discounts says that they intend to drive for that control. CPQ's model has some interesting features which can be used to good advantage with some corporate customers. As I said before, this is to some extent a defensive strategy against Dell, but more importantly an offensive push which leverages CPQ's position and model against IBM and HP. I think you will be surprised by the value of some of the innovative programs that CPQ is developing. My personal opinion is that CPQ does not intend to abandon the channel, which by implication means that they are not going to go head to head against Dell in Dell's strong areas. I don't think the issue of how well these programs compete against Dell is the key question. Remember that CPQ, IBM and HP are all ahead of Dell in this market, and CPQ is bigger than HP and IBM combined in unit sales. CPQ has chosen to fight a one-front war, as has Dell. IBM and HP do not have that luxury. I believe that both Dell and CPQ can enjoy a hearty lunch at the expense of the other two.