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

To: arthur pritchard who wrote (81316)	11/19/1998 1:11:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

this has been discussed extensively over the last few months but the nutshell version is - Dell's spectacular growth has been fueled by excellent cash management built on a high velocity of money, low fixed costs, concentration on product lines where margin can be maintained and cost of sales reduced, and of course on minimizing inventory and distribution costs. Dell has shown excellent judgement on where to focus their energy and product lines to maximize this model. But to maintain growth, they must either start to move into areas ajacent to their current market, such as more high end storage or lower cost desktops, or they must make a horizontal move where they can continue the strategy that has served them so well thus far. Expanding the current market almost inevitably pulls them into a higher-cost, lower-return business. Storage requires more engineering and development and investment in physical facilities and staffing. In fact all of the high end products will require Dell to add service infrastructure to make a deep penetration. They have not shown any inclination to do that. Alternate plan is to use the savvy and business infrastructure to move a different class of product. This might be an intangible. like some integrated internet services model, which would leverage Dell's reputation and skill set but would not add fixed costs. It might mean that they set their sights on different kinds of physical products which have not yet been subjected to the Dell analysis, and some of those may fit the business model. They might leverage their great field execution to pull related products into enterprise accounts. I don't know what Dell will do but I think it will be something 'out of the box' in terms of their current market and product line. Hope this clears it up a little. As I said in an earlier post, I had expected that evidence of whatever this new direction will be would have started to apear by now, as a counter to the mounting evidence of some pressure on Dell's traditional business. The best time to make that move is now, when the base Dell machine is running at peak efficiency and speed. None the less, I have not seen any hints like this either in the press or from the various insiders I occasionally speak with.