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To: sam who wrote (1607)	1/20/1999 6:05:00 PM
From: B. A. Marlow	Respond to of 5843

To sam Re: ONSL (OFF-T) Think the street misunderstands this move. Commentary seems to suggest that ONSL is regrouping out of desperation. Au contraire. ONSL is apparently setting up a stealth "front end" and consumer interface for wholesale distributor Tech Data. There's a lot more here than meets the eye. The move is looking like a seminal business model shift for the computer distribution channel; Tech Data is a key, key player. (FYI, ONSL's major investor, Softbank, is a big wholesale distributor in Japan; global implications here.) Don't kid yourself about the margins. This thing can be done at "cost" the way cars are sold just above "tissue." Guaranteed that ONSL will be selling based on "left column" cost and buying based on "right column" cost. There's a big spread there. In addition, there are coop ad allowances, rebates, incentives, earn-outs, etc. And there are no inventory carrying costs for ONSL. Product will be drop-shipped by Tech Data (no ONSL warehousing or overhead), and freight is marked up by ONSL. If you add it all up and throw in ONSL's ad sales potential against this "captive audience," it could be huge. Also important: This model translates to other lines: sports equipment, consumer electronics, kitchen toys, whatever. When you think about it, it's sort of the "other side" of an AMZN-like picture. The refurb business will continue as there is no conflict. One thing's for sure. If this approach works, ONSL's gonna rewrite some rules... No position in ONSL, but this is a big development. BAM