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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: TTOSBT who wrote (59309)	7/4/1998 12:40:00 PM
From: Bill Jackson	Respond to of 186894

TTOSBT, I assume Dell and other buyers research their client base and make future use assumptions on each component that will have a rise from inception to maturity to decline with the price starting high and volume low and going through a curve as time goes by. Memory, software, harddrives, cases,CDRoms, Monitors and CPUs are all factored in to Dell's "model" which is fully dynamic and new data is entered daily. This gives them some sort of predictive capability. They are more capable at this than the others and thus their ship to order model is the most efficient and leanest in the industry in terms of shortest ship time after receipt of order. I assume Intel makes all their major OEM CPU clients go through this kind of predictive exercise as a condition of "partnership" I am not sure what degree of flexibility has been built in to the Dell/Intel purchase agreement. Must Dell take 100,000 CPUs as they have predicted or can they scale back down by 25% or up by 25% or some other %. Usually a condition of getting baseline CPU pricing is an agreement to eat it when you must. In addition there is usually some price protection and Intel may allow the agreement to flex without breaking for a major client like Dell. Others with less sophisticated market predicting capabilities have to wing it more and might reserve the right to cancel and thus pay extra and also might be short if they want to increase their order. Those lesser people might get starved in a shortage, especially if they had a bad case of AMDitis. Paul might have more insights into how Intel models demand based on client feedback and their own data. Bill