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

To: Meathead who wrote (48290)	6/20/1998 4:10:00 AM
From: JRI	Respond to of 176387

More confirmation of a turn in ASP's for Dell.... I found this on the AOL Dell message board.....Accept with the necessary caution! <<Minneapolis, June 9 (Bloomberg) -- Dell Computer Corp. doesn't expect a repeat of the ''unusually big'' first-quarter drop in prices for its personal computers in coming quarters because demand remains strong, an executive said. However, if price cuts for computer parts like semiconductors lead to lower PC prices, Dell intends to maintain sales growth by using the lower prices to attract more customers, Vice President of Finance James Schneider said at the annual Piper Jaffray Inc. investors conference in Minneapolis. >> I don't think this has been posted, but it adds to 3rd party confirmation (posted a couple weeks ago on the thread) and comments from TM and MD that (1) the first quarter ASP decline was "unusually" large and (2) that there may be, indeed, even an increase in ASP's in Q2... Certainly, barring a drastic July, one would think that another 9% decline in ASP's in the 2nd quarter can not possibly in the cards for Dell...I reckon a flat ASP or ever-so-slightly up would be a better bet at this point... However, we all know that Dell has been successful at growing the company's revenues and profits at an extroadinary rate in both periods of declining and rising ASP's, so the whole thing about ASP's is really not as important as some think.....(for Dell, at least). Chuzz's posts have been great on this point... Are you listening, JP?

To: Meathead who wrote (48290)	6/20/1998 1:18:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

Meat - I thought we had already provided the tutorial on this, since the data is easily obtained. But let's run through it again. 1) Look at technology which is at 'state of the art'. Large configurations of these classes of systems will be about 10% of current purchase, driven by the business segment where any technical advantage turns into money (such as reducing design times for expensive talent). 2) Look at technology which is 12 to 18 months old. Technology which fits mainstream needs from this period will fill about 80% of current purchases, driven by the need to maintain touch with the mainstream of software and industry practice as constrained by the 5 year TCO. 3) look at older technology, more than 18 months back. Small configurations using this technology will be about 10% of current purchases, driven by the need to maintain consistency in older systems where the maintenance advantage of a homogeneous environment outweighs any technical advantage. This is driven by the economics of book value versus utility value and by the usage models. It has been true for a long time and it is true today. A change in industry ASP can move the whole curve a little but that is a minor secondary effect. The "266Mhz is all you need" policy is exactly equivalent to the "286 is all you need" policy of 1986. It was right for the volume segment at that time and it is right today. Outfits like Gartner make their money by driving tried and true policies. Can anyone point to a Gartner, Standish or other 'think group' report that ever suggested that a majority of business purchases should move up to state of the art in either hardware or software? Those boys are not in business to take chances, especially when there is no business justification to deviate from past practice.