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

To: The Phoenix who wrote (66824)	9/23/1998 11:56:00 AM
From: Stewart Walton	Read Replies (1) \| Respond to of 176387

Gary, I don't think you hit a nerve. What you hit was a dead spot. Kind of like Dilbert talking to the marketing manager. I can see the Direct model. I can see the channel model. I have difficulty seeing the mixed model, and all the accommodations you suggest appear to be hand-waving over a very difficult issue. But I have no professional experience in this area, so I'm loath to comment, unless goaded into it. My skepticism about the success of a transitional mode is shared by many on this thread, and none of the major players has yet attempted it. How long has Dell been outperforming its competitors? CPQ BTO and Ingram don't compete in my opinion, since they are still based on a distribution model, with its inherent cost of inventory. Even a company which doesn't have the transition issue (GTW) has had a difficult time. This is not easy. It involves the right products, the right plan, the right people, and the right time. This is definitely Dell's time, and others are going to have a very difficult time catching up. On a different subject, doesn't it appear that the new appliances will be supplemental to PC's even in the home? I believe the growth in appliances (thin clients, whether powered by WinCE or something else) will not come at the expense of PC growth. And for business users, it's a non issue. Thin client appliances are a new market. Regards, Stewart

To: The Phoenix who wrote (66824)	9/23/1998 1:06:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Gary, I thought I did respond. The key point is that intermediate distribution channels make sense only if they are economic. If you lose sight of that key fact you will never be able to figure out channels. So typically a channel is an economically advantaged method of moving physical inventory from the manufacturer to the end purchaser. The simultaneous advantage and disadvantage of a classical distribution channel is the existence of inventory. If you are talking about car parts or nails and screws the existence of an intermediate channel is a plus because it serves as local storage and depots for LCL distribution. Obsolescence is not too much of a problem because the inventory does evolve rapidly. And the advantages are great to the customer because he can get exactly what he wants at retail for a reasonable price. But invenories are the kiss of death in technologically oriented goods. Add to that the fact that companies like Compaq use channels not only for distribution of goods, but also as salesmen for their product. And that combination is why channels are an albatross around Compaq's neck. They attempted to solve the problem by having the channel member do the BTO, but that just pushed more inventory into the channel and increased their risk. Now they are attempting to share space with the channel in their factories. This is a clever idea, but it has one major drawback: it perpetuates another layer of profit and it does not offer the traditional advantage of a channel to the ultimate consumer. In other words, it is the worst of both worlds. And the problem is difficult to solve because the manufacturer is tied at the hip to the reseller because of the sales effort. Some time ago, before the recent CPQ merger and inventory problems of the past year, it was pointed out that Compaq's profit per employee was higher than Dell's. The reason was not difficult to discern: Compaq was relying on channels for sales, while Dell had people manning the telephones. Dell's internet presence was a response to that observation and profit opportunity. But Compaq is still stuck with an external sales force that it dare not jettison. TTFN, CTC

To: The Phoenix who wrote (66824)	9/24/1998 12:39:00 AM
From: Ken Beal	Respond to of 176387

an adequate response Well, I see it in metaphorical terms. "Some solutions are better than others." Capitalism is a better solution than communism. That's why we drive Corvettes and have fast computers, and they're facing a grim winter that I wouldn't wish on anyone. Similarly, the direct model is always going to be a better solution than the channel. There may be some products for which a channel is better now, but once we have nanotechnology the producer will download blueprints to your house, which will then make the product. There does not need to be a middleman in that transaction. Dell is the pony to bet on. Enjoy, KenB