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Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: Bilow who wrote (1735)	8/30/1998 7:44:00 AM
From: rudedog	Respond to of 2578

Carl - This trend to simplification has many other drivers. Over time, the need to support backward compatibility, and the proliferation of new technology trends that have not yet gained volume market imposes a huge and growing burden on the test and support organizations for the major OEMs and for MSFT. This is a large component of future business model projections. These companies have incentives, in the billions of dollars over the next few years, to simplify the matrix. Some of this simplification has to do with standardization of interfaces and APIs which obsoletes older components. The PC97 specification worked out by MSFT, Intel and CPQ and now a requirement for MS certification as 'supported hardware' had exactly this goal. But a second trend, driven by the same Intel, MSFT and CPQ (ever take a look at how many standards are driven by that particular trio?) has to do with simplifying the range of base systems (platforms) which are required to hit market requirements. This is driving USB, 1394, and fibre-channel development, as well as consolidation of clustering, networking and application APIs. The goal here is to get to the 'microwave oven' model as the base platform - a thing that does the base function so simply that the problems going back into the support organization go into 30 buckets instead of 3000. It has a second benefit, which goes along with the trend you were discussing. The base package is reduced as a percent of overall system value. Instead of a lot of configurations of video, storage, and peripherals, we have a basic box with enough components to boot, USB for slow peripherals, 1394 for fast peripherals, and a standardized way of identifying and integrating systems components. This makes channel (or retail, or end user) assembly of complex systems as easy as plugging in the things the user wants, and the value of complex build to order at the manufacturing point disappears. It also takes the core platform from a $1500 or even $800 component to one of many $100 or $200 components as overall system ASPs continue to drop below the $500 range. This is not science fiction, the work to make this happen has been going on for several years and the results are starting to appear in the market. This transition will change the landscape for everyone in the business.

To: Bilow who wrote (1735)	8/30/1998 6:36:00 PM
From: divvie	Read Replies (1) \| Respond to of 2578

I tried to introduce MSFT's role in this to you but probably didn't make myself clear. PC hardware becomes simpler and cheaper but Windows does not. We will not see PCs as commodities until they are as easy to operate as a TV (remeber, my mother has to be able to use this thing). The vast majority of people on this planet will need tech support and $100-$300 box makers will not be able to do this. Eventually someone (and I bet you it's someone out of PARC) will come out with the killer OS that is nothing like that which we know today and set top boxes or wearable computers will become cheap (read impulse buys) and will proliferate. Where does this leave DELL? Well MSFT is doing all the PC makers a favour by trying to take on IBM and SUNW in the enterprise arena. Everyone is predicting the NT's domination in the next few years, but for now and the near future NT requires a lot of hardware to scale up sufficiently to run large databases and applications on. A lot of companies are finding that NT (and SQL server) is simply not scalable enough to cope with terabyte data warehouses for example. However, they are not betting against MSFT. As I said, you need a lot of servers to scale NT. Wolfpack (MSFT's 2 node clustering solution) is late but will further NT's march into the enterprise. With 2 node clustering you will need a primary domain controller (one box) a back up domain controller (2nd box) and then the main application server. Then double that for 2 nodes. MSFT plan to bring out 16 node clustering (think of all those $10,000 - $80,000 servers - yes they do cost that much) some time in the next century. so what's my point? You're right about the consumer market, but the enterprise is os much bigger. DELL is continuing to make inroads into the server market. MSFT is helping all PC Server manufactures by its inability to understand that making NT more and more complex by trying to compete with MVS and Unix means higher hardware and support costs for all involved. That is where the money is. I would greatly appreciate your thoughts on this.