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

To: Lee who wrote (84891)	12/11/1998 12:04:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

White Box Vs Channel stuffers. Lee: Talk about competition for the channel stuffers, they haven't seen nothing yet considering one of them have managed to royally piss off the VARs. =================================================== Tech Data to Build Generic PCs, Challenging Brand Names (11/9) ERIK SCHATZKER c.1998 Bloomberg News CLEARWATER, Fla. -- Tech Data Corp. will begin assembling no-name personal computers as the world's second-largest PC distributor seeks a share of the multibillion dollar global market for generic PCs. Tech Data already builds brand-name computers for International Business Machines Corp., Hewlett-Packard Co. and Compaq Computer Corp. Now, it also will assemble and distribute non-branded, made-to-order PCs for business customers through its network of dealers. Tech Data will use its plants that make computers for some of the biggest PC sellers to expand into the lucrative market for non-branded PCs, or ''white boxes.'' Channel Information Services, a unit of CMP Media Inc., estimated that $7.6 billion of generic PCs were sold in the U.S. last year, and Tech Data said the overseas market is equally large. ''We're looking to service and support the existing white-box market,'' said Tech Data President Tony Ibarguen. The company, the second-biggest PC distributor behind Ingram Micro Inc. of Santa Ana, California, will assemble the white-box PCs at plants in South Bend, Indiana, and Swedesboro, New Jersey. Tech Data rose 5/8 to 42 9/16 in midmorning trading. Computer resellers and consultants sold 6.4 million generic PCs in 1997, according to Channel Information Services. They assembled most of those using their own facilities, with parts distributed by companies like Tech Data and Ingram Micro. Tech Data said 30 percent to 40 percent of all PCs sold worldwide are generic. Compaq, the world's No. 1 maker of PCs, sold 5.1 million units last year. Tech Data is expanding into white-box making at the request of more than 60 percent of its reseller customers, who prefer to concentrate on sales and product support, Ibarguen said. The company will continue to make PCs for IBM, Compaq and HP, even as it assembles white-box computers using the same workers at the same plants. Generic PCs often compete with brand-name machines for sales. ''I'm not denying that there could be some cannibalization,'' Ibarguen said. Tech Data advised IBM, Compaq and HP more than a year ago that it planned to begin assembling its own PCs, Ibarguen said. Tech Data said the move into white-box assembly will help those companies by enabling it to build PCs for them at lower cost. Also, Compaq and the others are more concerned with competition from direct marketers such as Dell Computer Corp. and Gateway 2000 Inc., Ibarguen said. Tech Data declined to disclose expected revenue from building and selling no-name PCs.

To: Lee who wrote (84891)	12/11/1998 12:14:00 PM
From: rudedog	Read Replies (1) \| Respond to of 176387

Lee - I'm not exactly clear about what benefits a 5 X R&D budget can have on a business market determined to have customized solutions for their IT requirements. I hope that my comments are not unprofessional - I am pretty dispassionate when it comes to money, and I have a lot at stake when it comes to DELL, so I'm giving it a lot of thought. The mistake you are making about customized solutions is exactly my point. CPQ has 25,000 service professionals who do NOTHING but custom solutions - this is in addition to about 18,000 doing traditional break-fix support and 'sales engineering' work. DELL is doing all of that through third parties. They used to use DEC service for both break-fix and any custom systems work - now CPQ has that asset. DELL will be able to use its desktop and server build to order capability to continue making inroads into the corporate desktop and small server market. But that is not where the big money is, and it's not where DELL needs to go to maintain enterprise growth. They need to get the bigger systems business, and the third-party partner model has NEVER worked in that space. CPQ tried for several years to make that work (and Mike Lambert, the guy driving DELL's enterprise strategy, was the guy who tried and failed to make the partner model work at CPQ). That's why CPQ finally bought a service organization. Your analysis of the last 100 days (or longer term, say the last year) must be adjusted for the uncertainty the market has felt about how successful CPQ would be in integrating DEC, and whether CPQ would develop a strategy which would at least slow DELL's growth into the enterprise accounts. I believe that conventional wisdom now is that DELL needs to do more to achieve their enterprise plans, and that CPQ has managed to shift into the high end market and is developing some formidable barriers to entry for DELL. I also agree that CPQ's revenue growth will not match DELL's - but look at what IBM has done in stock price appreciation with almost NO growth! If we assume that CPQ will grow at more than twice IBM's rate for at least the next couple of years, but otherwise achieve similar dynamics, why would CPQ's stock price not follow a path at least as good as IBM's? Finally, let me add that I don't think that CPQ will be able to stay ahead of DELL's stock price long term - I expect DELL to get their act together and start to climb in 2H99. But that is not certain, and even then, expectations for DELL will be very high compared to CPQ.