Good Afternoon Sonny,
More on BN & Bertelsmann, The story made the first page on a newsletter from the national association of college stores. A few details I was unaware of was the fact that Bertelsmann owns the U.S. Publisher Random House. Bertlesmann is still moving forward with its own online venture 'Booksonline.com' in several European countries in November. Booksonline will use is network to collaborate with barnesandnoble.com in offering U.S. and worldwide customers a seamless experience of online shopping for books in multiple languages. I'm sure this will be a good alliance but it will take a while to become quite as big a pressence as AMZN.
I would love to see Abby be right and we hit 9300 again by years end but I don't think everything is going to fall back into place quite that soon.
Oracl vs SAP.. Hmm Yes of course they have competition and I see lots of jobs for both. I guess I know a little more about ORCL than SAP so that's why I got into ORCL. I did see you bought SAP, I know you wouldn't invest in a company you didn't think would do well. I guess I'll have to take a looksie, never hurts to cover all the bases. I won't even bother with AMD though. <GGGG>
You have a great day!!
Yack at ya later and Here's an interesting article about CPQ and DELL I thought everyone might like.
Ann
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usatoday.com
Compaq, Dell a Texas twosome
Lone Star State computer rivals duke it out
HOUSTON - On the floor of Compaq Computer's aging plant here, dozens of technicians assemble the latest Presarios for shipping to stores and, hopefully, buyers unknown. In a retooled factory next door, a much smaller crew builds custom-ordered personal computers.
In Austin, 160 miles away, Dell Computer's year-old assembly lines are humming. Trucks from suppliers marshal the front of each line, while others packed with computers ready to ship buttress the end. Every line is moving, and every computer part has a customer's name attached from the first step.
Today, Compaq is building only about 10% of its computers to custom orders. The goal was 50% by now.
The differences in the two factories illustrate how the world's No. 1 personal computer maker, Compaq, is struggling to stay out in front of up-and-coming Dell in a period of record growth and massive change.
"I just finished my 60th quarter, and this might rank up there with the most difficult quarter I've ever had," says Greg Petsch, Compaq's senior vice president of manufacturing and quality.
Compaq, which operates in 100 countries and employs more than twice the number of workers as Dell, must keep pace with changing markets as it grows into a company that sells everything from desktop and laptop PCs to mainframe computers and consulting services. Its acquisitions of Digital Equipment this year and Tandem last year give it a product range matched only by Hewlett-Packard and IBM.
Analysts and others say Compaq has little margin for error at a time when the market for computers is changing as quickly computer technology. The Asian economic crisis has hurt sales, and falling prices for PCs and computer chips are squeezing profits. Technology research firm Dataquest says revenue from the computer server business has fallen 11% since last year.
"We've known since January that once we closed (the Digital deal) we had to be ready to roll," says Compaq CEO Eckhard Pfeiffer, 57.
To keep Digital's customers from defecting, Pfeiffer retained many top Digital executives, such as John Rando, who headed Digital's widely respected services organization. Under Compaq, Rando has been able to keep revenue for that division growing.
Adapting slowly
But Compaq has been hurt in other areas, especially by its slowness to adapt to the build-to-order model of PC sales. Companies such as Dell and Gateway, which builds computers only after customers order them, have a bottom-line advantage because they never have much inventory to become obsolete and lose value.
Compaq learned the hard way that, with factories on three continents and thousands of employees, such a massive change takes time. The company already had been retooling its factories with software designed for traditional manufacturing when the decision to shift to custom-built PCs was made. That new software needed to be redesigned again, along with the assembly lines.
"We've lost sales" because Compaq has taken too long to deliver custom computers, says Ed Anderson, president of CompuCom, one of Compaq's largest distributors. But he says Compaq is moving quickly to correct problems and is almost able to turn orders around in two weeks. "We're almost home. If we can keep the unsold inventory of computers at two weeks or less, the cost advantage that Dell has is gone," says Anderson. Dell, the industry leader in inventory management, recently reported an eight-day supply of PCs.
Despite the inevitable comparisons between the two computer makers and allusions to a Texas rivalry, the companies don't see themselves as head-to-head competitors. Dell's strength is its ability to sell large numbers of custom-configured desktops to business customers. Its consumer business aims more at the PC-savvy who don't need a lot of labor-intensive hand-holding.
Compaq's focus is in the large computer and workstation area, where profits traditionally have been high. Its consumer business aims at the low end, with the idea that a customer who chooses a $799 Compaq PC will remain a Compaq customer more expensive, purchases. Compaq also sees a revenue stream coming from Internet services sold along with its PCs, noting that the average Compaq consumer buyer visits Compaq's Alta Vista search site on the Internet at least once a day.
Although Compaq's worldwide PC sales dwarf Dell's, Dell's sales figures are impressive. In the quarter ending Aug. 2, Dell's revenue was $4.3 billion, up 53% from $2.8 billion a year earlier. Compaq's comparable quarter showed revenue of $5.8 billion, up 5% from a year earlier.
"There's enough market that each company could double or triple without taking market share from the other, but the Texas rivalry is there," says Jim Schraith, former vice president and general manager of Compaq's North American operations and president and CEO of ShareWave, which makes home networking equipment.
But analyst Ashok Kumar of Piper Jaffray is not so sure that both companies can co-exist.
Dell is expanding its product line to include more high-end servers, aiming squarely at Compaq's key market. Dell's server sales to large business customers have gone up 140% in the past year, while Compaq's have risen only about 45%, says Kumar. And Dell was the first major manufacturer to introduce a server using Intel's fast Xeon processors, which customers are demanding.
"With the market slowing down, you probably have a situation where Compaq and Dell are bidding against each other," but Dell can win because of its low-cost structure, says Kumar.
Acting like a startup
Dell founder and CEO Michael Dell, 33, prides himself on his ability to keep his 14-year-old company moving quickly and acting like a startup. That means breaking off divisions into pieces as business grows, keeping the line between the lowest-ranking employees and the top managers as short as possible.
Compaq's top managers, by contrast, have seen their responsibilities more than double since it acquired Digital. The company has grown from about 30,500 to 84,000 employees, and its size makes it tough to change anything fast. Even though that's what CEO Pfeiffer wants to do. "Rather than letting other competitors climb up behind us and narrow the gap, we made the move quickly" into high-end enterprise computing by acquiring Tandem and Digital, says Pfeiffer. Integrating the companies "will establish our leadership."
Meanwhile in Austin, Dell's top managers aim to keep their growing company feeling small. The Dell sales division that once hawked computers to all schools, from primary to university level, now is split into three smaller divisions, each targeting a smaller slice of the educational market.
"It replicates the growth and development of the company inside with lots of 'little Dells,' " says Michael Dell. Also key, says Vice Chairman Kevin Rollins: "If you are operating a tad under-resourced, you prioritize."
So far, that strategy has worked. Over the past year, Dell was the fastest-growing stock on the S&P 500, up 129%. Shares of Dell that sold for $8.50 on June 22, 1988, when the company went public, are worth about $2,600 now, counting splits. Profits keep climbing, too. For the quarter ending Aug. 2, Dell's net income was $346 million, up from $214 million a year earlier.
The success is "a freak of business nature," admits Rollins, but he credits Dell's business model and its ability to move swiftly as market conditions shift. Compaq and other companies rely on sales forecasts to determine how many computers to build, says Rollins, and the forecasts aren't always accurate.
How long will the good times last? A Michael Dell responds: "I haven't found where it will run out of gas. We're getting to the fun part here."
By Doug Levy, USA TODAY |
