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

To: KVASIR who wrote (51377)	7/15/1998 10:33:00 AM
From: K. M. Strickler	Respond to of 176387

K, Very interesting article! Brings a few questions - however! ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^ DELL FLASH #7 ^ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The problems that I have with this DELL flash is that it is being reported by an IBM sales manager of an 'overheard' conversation, supposedly taking place between a DELL manager and a new Sale Rep. Why isn't it an 'IBM' flash? - informing IBM of DELLs possible plans? >>> On some points I have included a "NOTE" which can clarify points and offer a strategy or tactic to help you gain a better understanding of this competitor and how you can compete with them. <<< This initial statement where you added the NOTE is of particular interest here. Is the 'this competitor' DELL or IBM/CPQ? (that applies to the 'them' at the end of the sentence also.) >>> - Dell reps are being incented to SELL BELOW COST. <<< This would indicate that the reps are trying to cut DELLs 'profit' throat! If this could be proven true, that area manager would be 'history' if he worked my 'my' company! Compete, yes, price cut - sure a little - but to set that as an incentive would be definitely questioned, especially to go below cost! >>> - Dell will go as low as COST -32% to win these accounts. NOTE: In large accounts ($2M+ opportunities), Dell has been known to provide deep discounts off their home page price (qty. 1) to win the business. It is important to note that the 32% discounts quoted are off of Dell's home page price.<<< This statement is another of particular interest as it would indicate that on an order of $2M, DELL would normally have a COST basis ~$1.8M. To discount to -32% below COST would indicate that DELL is 'knocking' another $576K off the price making the sale at $1.224M. Now any time that DELL managed to get an order of this size with a company that needed this equipment, DELL is admittedly 'taking a bath'! If the 'life cycle' for a computer is as 'short' as 2 years, I don't see how the following statement applies? >>> - They feel this will take anywhere from 30 to 180 days depending on how deep they had to go to win the business. (e.g. The Director of Sales mentioned that it would take 120 to 150 days to recover from the Paine Webber deal).<<< DELL would have to be looking at the recovery in the next 'buy' cycle 2 years hence to make up the 'money' lost here, and at that time the prices would be lower due to technology advances. It seems to me that following this procedure would shortly put DELL out of business! Now, JMHO, this report may be from a good source or it may be 'wishful' thinking on the part of an IBM sales manager, trying to get IBM into some kind of pricing war. I'm sure that IBM didn't 'bite' for exactly the same reasons that DELL - DOES NOT ENGAGE IN THIS PRACTICE EITHER.