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

To: Thomas G. Busillo who wrote (80065)	11/14/1998 12:08:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Tom - Good post. I had been expecting Dell to start moving their business model by now, and I am a little concerned by MSD's attitude in the face of real and powerful threats to his growth model. A little-noticed item in the press this week got overshadowed by the CPQ announcement and the Dell earnings - I'm referring to the struggle over next-generation I/O between Intel and CPQ/IBM/HP. There is no question in my mind who will win that one and it won't be Intel. This will define the switch-based I/O infrastructure which will replace PCI. Dell will be at a disadvantage in the server and workstation game if this happens, since they are largely dependent on Intel for server technology. This could cap them into low-end servers, which CPQ will drive to PC prices and margins IMO. CPQ also intends to drive hard on the desktop with commercial models under $1K and consumer models under $500, wrapped with services offerings which will be expensive for Dell to match. CPQ can do that at 20% margins, Dell can not. This will make it much harder for Dell to hold ASPs - if the server ASPs and margins drop, if they are capped out of the higher margin server business by technology barriers, and if the desktop continues to erode, they better have some other cards to play. Watching the next couple of hands with great interest...