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

To: PAL who wrote (82789)	11/30/1998 1:29:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

PAL, thanks for an interesting and enlightening discussion. My major argument against PCs being a "commodity" is the fact that PCs are not fungible. By the way, I think (Democrats call it VooDoo economics). is a misattribution. The first time I heard this phrase was when George Bush used in to characterize Ronald Reagan's economic position in a debate for the presidency in 1982. I think it was New Hampshire. TTFN, CTC

To: PAL who wrote (82789)	12/1/1998 9:20:00 AM
From: Geoff Nunn	Read Replies (1) \| Respond to of 176387

Nice comeback, PAL. I think you make many good points about economics, and do an altogether impressive job of rebutting a charge I now regret. Your criticism of the model of pure competition is right on target. I also agree with you that Samuelson is outdated, and about the importance of the Laffer Curve, along with all your other points about economics. My view of e-commerce as pure competition is based on the assumption that consumers will be well informed about their choices, and that price will be all important in guiding their purchasing decisions. I grant you though that this is no more assured than the outcome you expect, in which some firms prove superior and become highly profitable. Here is what concerns me about Dell entering the e-commerce business. M. Dell - in every interview that I'm aware of - has said the firm has abundant additional opportunities for profitable investment, more than it can handle. Last year he was quoted saying Dell could make money in the sub-zero pc market, but wasn't interested because there are better opportunities elsewhere. In the HBR interview last April, he suggested Dell doesn't lack for profitable investment opportunities, but he also said something else which I consider even more important. He said the computer industry is undergoing profound change away from the vertically integrated model of the 'eighties, as exemplified by the likes of IBM and DEC, who produced everything that goes into a computer but the cardboard box it is shipped in. That model is passe. M.Dell said that DELL would not manufacturer hard disks, CPUs, or anything of the sort, but would continue to focus on doing what it does best - assembling, marketing and distributing PCs, and providing collateral services. DELL would not make the mistake of entering spheres of the business that are best left to others. I believe MSD is on to something extremely important. One of the most common mistakes in business is for firms to enter fields they know too little about. Or, they may know quite a lot about the business, but they aren't capable of innovation. Pick up any copy of Business Week and you can read about them. One example: Creative Technologies, which used to be well known for its high quality sound cards. A few years ago CT was the leader in the field but then look what happened. CT got the bright idea of entering the business of manufacturing CD ROM drives. This decision proved disastrous and the firm is still reeling today from the losses it suffered. Another example is HP, which jumped into pc manufacturing a few years ago at a time when the field was already crowded, and with no real expectation of competing successfully against the best in the field (i.e, Dell). As it happens, HP has lost $mil every qtr., and with no light at the end of the tunnel. I guess that I'm dubious that Dell, if it were to enter the e-commerce field, would be playing on its strengths. I see a risk that it could end up repeating the mistakes of CT and HP. Regards, Geoff