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

To: TCBinAugusta who wrote (78400)	11/12/1998 8:51:00 AM
From: rudedog	Read Replies (2) \| Respond to of 176387

I don't think the posters on this thread have understood the real impact of CPQ's strategy. The small-medium business market is a very large segment, something on the order of $35B, which has low penetration in comparison to the larger corporate market. It is dominated by small Value-added Resellers (VARs), not by the traditional CPQ channel partners. Dell has not done well in the SMB market, because the VARs can't make money reselling Dell hardware. Likewise CPQ, HP, IBM have had problems in SMB because their big channel partners tend to skim the cream, which makes the VARs wary of getting involved. CPQ's strategy here is geared to supporting the small mom-and-pop VARs who have nelly's brother bob build white boxes today. CPQ developed this by a careful study of the market - where to the VARs make money, how much money, how can CPQ put together a program which helps VARs make more money selling CPQ than by selling white boxes? These VARs often do only 5-10 boxes a week, but there are a lot of VARs, more than 200,000 in the US alone. Mechanisms to attract these small guys include the agent model which allows the VAR to make nearly as much simply by referring the sale as if he built the white box, with no inventory cost or service risk, as well as bundled services and packaging which allows VARs to offer more sophisticated solutions without in-house technical capability. Also the range of built-in e-commerce and internet services are innovative and hard to match.. These take advantage of CPQ's AltaVista resources as well as volume deals with outfits like UPS which allow a small business to instantly get a full suite of internet capabilities. Dell does not currently have much presence in the SMB market, and this CPQ initiative will make it harder for Dell to penetrate that market. The Dell model does not give them a significant advantage here. This is also an important growth market for Dell as it is for all the majors. This has nothing to do with who has a slicker web site, it has to do with understanding the dynamics of the market you are trying to penetrate, and IMO CPQ has done a much better job of understanding the product requirements, then building a business model which uses CPQ's strengths to build an advantage. If Dell maintains its arrogant attitude towards this market they will permanently lose their opportunity to develop SMB presence. I have not seen a single post on this thread which shows any understanding of the SMB market, or the reason that CPQ's initiative will work here, or how Dell will respond - just a bunch of talk about Dell's current market, which is corporate and some home users, not SMB. I hope Dell management does not have it's head in the sand in the same way as the people posting on this topic on this thread.