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

To: Calvin who wrote (74388)	10/25/1998 11:25:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

Calvin - It is exactly the TCO argument which will drive the commercial desktop space to lower price points. The benefits of more highly-integrated, network-oriented desktops are not lower initial capital costs, that is a side benefit. The primary benefits are in lower administration and maintenance costs, playing exactly to your support argument. Low-cost PC's lack network management features and have less or no expandability. They're also less consistent in component features (i.e. open 10 of them boxes and they're not all the same inside). Don't look in the rearview mirror. Your arguments will not apply to the next round of commercial desktops, which will be highly optimized for network operation and maintainability. Look to see highly standardized desktops with better network manageability and much higher reliability than anything available today, and at prices well under $1000, approaching $600 within 12 months. These machines will blow away anything available today in terms of 5 year cost of ownership, and they will win on every dimension, from lower initial installation cost through lower ongoing administration and support to better residual value throughout the life cycle. All capital costs (hardware and software) amount to less than 15% of the five year cost of ownership for a fortune 1000 company, based on those same META and Gartner studies you reference. So hardware cost is not a driver, it is an incidental. This is the motivation for Gerstner's remarks about 'the PC is dead' - he's setting the stage for an enterprise-java based, network centric push over the next 2 years. Intel is also one of the prime movers behind this strategy. This will become more and more obvious in the very near future. Intel has determined that they need to push their high end CPUs (Xeon and Merced/McKinley) to maintain profitability and keep AMD at bay. So Intel wants to see a market where thin clients with razor thin margins are served by 'Fat' servers using those expensive Intel chips. Let AMD take a hunk of the desktop market, Intel will respond with Celeron and PII and make up the money in the high end. However, IBM and others will use the ability of a lower cost thin client to put pressure on both Dell and CPQ, who they now see as their primary competition (CPQ especially). How does Dell respond to this? I expect that they will use their increasingly effective enterprise desktop model to push integrated solutions involving lower cost clients and Dell servers. This should actually drive ASP and real profit up for Dell, since it plays right into the areas where they are already strong. Dell will stay close to both Intel and MSFT, and 'surf' behind IBM, shifting their mix increasingly to midrange servers.