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

To: The Phoenix who wrote (60428)	8/24/1998 12:26:00 PM
From: Tumbleweed	Read Replies (1) \| Respond to of 176387

re Dell vs Compaq pricing. If Dell drops prices for a big deal why couldn't CPQ? They can and they do and I'm sure they beat Dell sometimes. However, do they make a profit doing that? As I remember, HP lost money on its PC business last Q. Dells more efficient return on capital means they can lower and still make a profit, plus their lack of inventory means they get the benefit of falling prices quicker, which means they are into more profit quicker, or they can drop their prices and still make a profit. What happens to Compaqs 8 weeks of inventory when Intel drops $100 off the CPU and PC prices fall accordingly? With Dell, they have, what, 1 weeks worth of CPUs , not 8. JoeC

To: The Phoenix who wrote (60428)	8/24/1998 12:45:00 PM
From: SecularBull	Read Replies (1) \| Respond to of 176387

Gary, the fact of the matter is that you either are a DIRECT marketer or you are not. The efforts of Compaq and IBM to assimilate the DELL model, are half-hearted at best. You must build a direct model from the ground up, and too much of their distribution and service structure is centered around the indirect model to move to a pure direct model (or even close). I think this is why we'll see both companies move further away from direct competition with DELL, and more towards (or stay as) full-service companies. They'll say that it's because they believe that their companies are better positioned to deliver and service product in the full service model, but really it's about the fact that they can no longer compete with DELL and maintain good margins. The margin erosion is not completely borne of the fact that they have inventory problems (internally) only, but also because they have to make room to cut in their distributors. The world is not moving towards a go to the store, and buy the PC environment at all. It is moving in the opposite direction. DELL is has not marketed in that area, and therefore has nothing to lose from this contraction. The indirect marketers are losing share, and have to find a way to hedge their losses (try to become direct), or hedge their margins (diversify). DELL does not believe that their efficiencies are best exploited by becoming a full-service computer and software firm. Nevertheless, they understand the importance of one-stop-shopping to some customers, and have therefore put together a package of products and services provided by technology partners (see vertical integration), each of whom is more capable at doing what they do than any one company could do in one package (and more efficiently). Question for you: If Compaq is going to further develop Digital's Alpha chip, who do you think that Intel is going to prefer to do business with? Dell or Compaq..... Compaq is the one that's exposed on this one. Technology moves too fast for one company to do everything (well) in this area. Regards, LoD