John,
Just a few comments before retiring. As always, you're posts are interesting.
<<E-machines currently has only a handful of employees....Despite a fantastic start, let's see where they are six months/a year from now. It appears to me that they essentially have become Packard-Bell of 1997 (with less profits)...>>
I'm not sure I would agree with this comparison. Packard-Bell has a quality issue and I have not seen a public filing of their financials (if you have, would you please enlighten me). E-machines claims to be profitable, but since they just started selling here in November, it's a bit early to make a comparison with a company that's been around in the pc business for quite a few years.
<<as their business grows (and the issues that face all companies when the grow starting hitting them), lets see how "quality" their management is....>>
Agreed.
<<....right now, they have a simplistic formula which works great in the low-end, but the formula is a bit different up the food chain (wouldn't you agree?)...>>
Interestingly enough, I agree with this point, albeit for perhaps other reasons. The emachine distribution model is to make a profit in the sub-$600 market. Their concept is that at those price points, customers come into the retail stores and buy the machines like "Furbys." There is little inventory involved, the retailers like Office Depot love the machine because people who buy them are spending incremental dollars "saved" on higher margin peripherals and software (talk with Office Depot), the return rates are a fraction of the norm for pc companies and the repair record so far is quite good. Moreover, the price protection policy is quite limited. Thus, I don't believe that migration up the food chain is necessary at this time. In fact, the issue of emachines is not whether they will do well as a company, but whether their concept is correct. So far, I see the gearing up of pc companies, including Dell, to sell at aggressively lower price points as confirmation that the growth in the pc business is in the sub-$1,000 area. I've said before that given MD's stated goal of wanting 40% market share, he would have no choice but to aggressively enter this segment if the emachine model proved that that's where the customers were.
<<all businesses get more difficult to manage, maintain quality, etc..when you are selling hundreds of thousands, then millions of units........a year from now, I'm sure that investors will be pressing E-machines for profits...not just un-profitable marketshare,>>
Um. ... we don't know that they are unprofitable. Their CEO claims otherwise. We will know soon enough though as they will most likely try an IPO this year and it will be in the S-1.
<<and e-machines will have to grow into unfamiliar, much more complicated territory to make it happen.......>>
Not if their distribution model works..
<<.......Some on the Burke thread see it as a given that E-machines will successfully enter the commercial market>>
I can't speak for others, but in my opinion, they are already entering the small business segment which traditionally purchases units from retail. For instance, they were reported to have been approached to sell 20,000 units to a utility company who wanted to give the units to their good customers (not their enemies mind you <g>).
<<...I find this interesting given how Gateway and Micron have made numerous attempts at the large corporate market, and made nary a dent....it is obviously not that easy, even for (direct) companies that have been around for many years...>>
Much tougher in the large corporate market, but I have never said that is where they are headed. Instead, I have focused exclusively on the consumer and small business segments on this thread because that is where eMachines itself wants to be positioned eventually and that is where Michael Dell has said Dell needs to go. That sets up a wonderful conflict of business models.
<<but I always find it hilarious when others on the thread (not you!) compare e-machines to Dell....oh yeah, I forgot to throw in that doesnt include the monitor, service, etc>>
Now I find this funny. Each time I try to shine the light on the facts, someone comes up with this monitor stuff, then attempts to say that the DELL monitor is a $200 credit. It isn't. It's $130 on their website.
Comparisons, by the way, are an interesting issue at this price. For instance, if one is interested in a 366i from emachines, one can compare it to the $869 Dell 333 (w/o monitor). Then other issues arise for comparison. Some people might decide that 4MB ATI Rage AGP is OK for their use and forego the need for a 8MB video from the same company. Others might say that the increase of 366i (soon to be 400 Celeron) is worth the difference in warranty features, or decide that they can spend the difference in price on a Best Buy extended service/no lemon policy. It is interesting to note that HP has a 366 Celeron for sale at Office Depot for $799 (849 at Best Buy today).
But some customers look at the sub-$600 area and decide that it's worth taking a 1yr look at that price and perhaps buying an even better system a year later, as prices continue to fall.
IOW, comparisons and one's reactions to differences are somewhat subjective.
<<E-machines may/should do better in the small business market, but having owned a small business, I would be loathe to buy a computer from a company only in existence for a few months (even if successful), and without a well-rated service organization. I couldn't have afforded any screw-ups with my "box"...that is not how I made money...I feel certain that I am not the only small business person who feels this way...If they maintain their so-far good reputation a year from now, I think they will look more attractive to the small businessman (or woman)...>>
Some small businesses will have no problems and others will. I'll agree that their reputation a year from now will be important.
Meanwhile, if my hunch stated two months ago is correct, you'll be seeing major players moving into the sub-600 segment with Celeron offerings.
<<I don't think the majors (Compaq, Dell, IBM, etc.) are anywhere near as arrogant about E-machines, as the U.S. automakers were with the Japanese threat...I feel certain that Compaq, IBM hardware unit, Packard-Bell are scared silly (and looking for answers>>
Agreed.
<<If you go back a couple years, Dell has no competitive offering for first-time buyers...now, at least they have something in the ballpark (with more on the way).....obviously, partly an Intel (Celeron) issue......It appears to me that Dell has become more competitive (not less so) in the low-end market in the last few months....since Dell is growing from a low-base in that market, growth can still be at a fast %, even at low gross levels...>>
Agreed.
<<Regardless, the low-end market is only one piece of the overall growth puzzle (for Dell) as you know...The other pieces, individually, are just as important (if not more so..)>>
Agreed.
<<I have great respect for E-machines and what they have accomplished. I think, though, there is a whole lot left to this story..They still have a lot to prove, IMO. It is not a given that they will survive/thrive either...They've gotten off to a good start, though..>>
Agreed.
<<BTW- Isn't Microsoft 2000 supposed to be a memory hog?? What impact will that have on low-end machines???>>
More cheap DIMMS?<g>
As always, enjoyable discussing this with you. |
