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To: Barry Grossman who wrote (18530)	4/12/1999 12:56:00 PM
From: MulhollandDrive	Read Replies (1) \| Respond to of 93625

Barry- If I understand your post correctly, I think that argues against boxmakers near term. As I said, I think Dell is positioned better than most and obviously will suffer the least as each manufacturer jockeys for market share. Dell has historically averaged more $$$ per unit than the other manufacturers and I think is reflected in their margins. They said for months that they were not going to go after the sub 1000 and yet they have, they are now entering into the storage and service arena. These maneuvers indicate to me that they recognize that even if they successfully grab market share from IBM,HWP, & CPQ, competition being what it is will continue to cause price erosion and without new income streams, their bottom line will be effected. So I re-iterate, DELL being the low cost producer as you say, is best positioned, but they have their work cut out for them. I think we'll now a lot more after the second quarter results. bp

To: Barry Grossman who wrote (18530)	4/12/1999 1:19:00 PM
From: Dave B	Read Replies (2) \| Respond to of 93625

OTOTOTOTOTOTOT bp & Barry, Re: Dell. The thing that impresses me about Dell is that they use a metric called the Cash Conversion Cycle (more discussion of this available on the Dell thread) which measures how long after they pay for the parts for a computer that they receive payment for it. Right now they're at -8 (yes, negative 8) days. That means that they get the money for a system 8 days before they have to pay for the parts. They're not even using their own money to build PCs!!! They're using the customers money! Therefore, falling prices actually helps Dell - they pay less for the parts that they put into a computer than they thought they were going to have to pay. On the other hand, Compaq inventory sits in stores gathering dust (current estimate is that they have 3-5 weeks inventory in the channel) and eventually Compaq has to give the retailer back some of the money that they received for the system since the retailer can't sell it for as much. And the Dell model can be extended to new product categories (servers, network attached storage and other appliances, etc.) as those technologies reach levels where they are more "commoditized". Which is happening now. Dave