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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Barry Grossman who wrote (18532)	4/12/1999 1:27:00 PM
From: MulhollandDrive	Respond to of 93625

I'm not arguing that DELL will not emerge as the market share winner, I'm just speculating that the next 6 months could prove challenging. As far as the stock is concerned, I doubt that it will go below 200 DMA which is 35ish. I also realize that my RMBS bias may be affecting my perception, I'd like to see a big push for DRAM come 4th qtr. Today's purchase deferral is tomorrows pent up demand<vbg>

To: Barry Grossman who wrote (18532)	4/12/1999 1:38:00 PM
From: Dave B	Read Replies (1) \| Respond to of 93625

OTOTOTOTOTOTOTOT Barry, Re: sub-$1000 PCs. Dell has said that they will move down into this area when they can do it profitably (and my first question is, if Dell can't do it profitably, who can? Probably no one as we're seeing with Compaq's troubles). I don't think they should be in any hurry (it sounds like we're in agreement on that) -- I'd rather they focus on profitability and how to apply their production model to these low-end systems when possible. There are a million products that Dell could sell for no profit. Why not toothpaste? or lightbulbs? Why not just remove the profit from theis current systems and sell them for $500 less? In this context, it's obviously ridiculous to sell at a loss (and make it up on volume, I guess). I think the difference between the "gotta be there" and "just wait until it's profitable" camps is the perception that low-end systems are stealing market share from higher end systems. I personally believe that low-end PCs represent a new segment, not a shift of people who would have bought at $1000+ prices. A perfect example is my father. He bought one of the $499 computers from Microcenter ($650 with monitor) last year, but he would never have bought a computer for $1000+ (I asked him that question this past Saturday since there's been so much discussion about E-machines and others lately). He had it in for repair 4 or 5 times during the warranty period - mostly for problems he caused. Any profit that Microcenter made on the box was quickly chewed up in the warranty costs. First-time users are not going to accept the "no support" policy that these new low-end vendors are espousing. If they don't get help they're going to scream. And that's going to eventually drive these companies into bankruptcy. The one thing that people don't give up is an expectation of quality. Packard-Bell is a great example. I was on a listserv list once where someone asked for a PC recommendation. They received about 10 recommendations split across Compaq, Gateway, Dell, and HP. They received about 20 messages (seriously!) that said DO NOT BUY A PACKARD BELL!!! The quality was poor and if you had a problem, it was difficult to get it fixed. That was the first I had heard of this problem and Packard Bell was the leading retail brand at that time. It was clear, though, that people were pissed off and I knew that Packard Bell was not long for this world. At the time I was consulting for a hard drive manufacturer that supplied a LOT of hard drives to Packard Bell and I bet one of the people there that within two years Packard Bell would be virtually gone. I won. I asked my father on Saturday if he'd buy the same performance-level computer again and he said no (I asked him this because I was helping him do some scanning and I was getting frustrated with how slow it was). I asked him if he'd buy the same brand and he said probably not. He said he'd buy a more powerful, more expensive computer next time. So low-end PCs, I believe, will be a great way to get some users into the market who otherwise wouldn't have been here, but they'll quickly get tired of poor performance and poor support and move up to the market leaders for their next system. And just to get a little Rambus in here, just because a PC is a "commodity" doesn't mean that companies can't innovate. The Japanese have taken a lot of commodity products and innovated around them. Orville Redenbakker (sp?) turned popcorn from a commodity into a gourmet item. I believe Dell is very committed to using technologies like Rambus to help differentiate their PCs and expect that we'll see them jump in with both feet. Dave