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To: Rosemary who wrote (6301)	8/16/1998 10:15:00 AM
From: Alan Hume	Read Replies (1) \| Respond to of 93625

Hi Rosemary, what I am saying is that (IMO) a lot of DELL's has been based on their direct marketing policy. i.e. much lower distribution costs. Both GTWY and very recently CPQ are selling the same way. So what was DELL's advantage, is now less worth. For example, an HP PC in the store labeled at $1000 includes approx. $400 distribution costs. DELL selling a similar model at $900 makes $300 more profit. If their competitors also sell direct then it drives down the market prices faster and lessens the profits This is obviously expressed in simple terms, but along these lines is how it works. Regards Alan