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

To: TigerPaw who wrote (84946)	12/11/1998 5:01:00 PM
From: rudedog	Read Replies (2) \| Respond to of 176387

Tiger - Dell is first in line for chips, not only as a reward for loyalty but they still have the threat of using someone elses chipset if they don't get supplied. First, Intel is famously short on loyalty. The first in line is the guy with the oldest outstanding purchase. Dell does not end up first on that list because they do not commit to long term fixed delivery contracts. Dell has recently moved Intel to a somewhat different model which ties Intel into Dell's supply chain management system, which more accurately allows Intel to predict future demand. I believe Intel does what it can to create business arrangements which will not starve Dell for chips, but when push comes to shove they fill oldest outstanding orders first. As to the threat of moving to another chip. Intel reacts to that in a different way. They lock OEMs into their technology by doing joint engineering, by providing design help, and in some cases by actually providing the designs and in some cases boards. Dell has been one of the heaviest users of all of those services, so the threat that they would go to AMD in any significant way is not credible - Intel would get a lot of advance warning about that, and Dell would have to invest a lot of engineering which they are not currently geared up to do. Intel would probably sweeten the pot with more co-marketing dollars or more engineering help to keep Dell on their team. Which would Intel regard as more credible - that CPQ, who already has AMD and CYRIX designs in production, would shift more product onto those processors, which they could do on very short notice, or that Dell, who is many months away from any AMD products even with a crash effort, and who would suffer big expenses and take a big risk in both new product testing and market perception, would do so? There is no doubt in my mind that Intel would rather keep as much business as possible, and that means CPQ gets the chips. I hate to break it to you, but Intel are not a bunch of nice guys, they are the baddest hardball players in the business. But the bottom line is that neither of these things gives Dell much leverage to get chips when they are scarce, and we have seen several times this year when Intel supply problems put Dell behind the 8-ball. Dell is certainly not 'first in line'.

To: TigerPaw who wrote (84946)	12/12/1998 5:24:00 AM
From: nihil	Respond to of 176387

RE: small guy shortages My understanding is that Intel is not looking for any additional distributors at this time, and this has been going on for years. It is also not seeking any new direct customers, unless you want to buy in the multimillions. The little guys who are complaining have probably never bought anything directly from Intel anyway. Some of the medium sized companies may have had a direct purchase agreement and satisfied their unmet needs from brokers or distributors who have their own ways of allocation of scarce goods -- often raising prices (since they cannot legally agree with Intel to fix resale prices). Intel may have no exclusive deals with anyone -- even Dell. If you want guaranteed supplies, you had better enter into bona fide joint development agreements with Intel and order well into the future. It's called antitrust -- and prevents a monopolist from leveraging one product off another or seeking a monopoly by punishing a customer who buys from its competitors. Intel is repeatedly investigated and has a program to avoid prosecution, although it is sued successfully from time to time.