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

To: David Harker who wrote (117061)	4/13/1999 3:10:00 PM
From: edamo	Read Replies (1) \| Respond to of 176387

david...believe i postulated the ibm "loss leader" concept it only works for a while...when the "loss" becomes a real "liabilty" and can no longer be offset by the "end game"... that's when business groups get axed....such as was the case of ge and westinghouse...these are classic examples of how two companies changed drastically their charters, when they no longer could compete within the arenas that they not only dominated...but built!!! ibm on the cutting edge of technology...but a dinosaur insofar as marketing methods....that's why dell "fresh" approach gains market share!

To: David Harker who wrote (117061)	4/13/1999 3:17:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

David, you are missing a couple of points. First, there is a tradeoff between volume and overhead burden. The more units you crank out, the lower your cost because the factory burden is spread out over more units. Manufacturing efficiency is the key here. Second, you have the issue of transfer pricing. Most companies set up transfer pricing for components internally produced. It may very well be that PC guys argued that internal pricing created artificially high costs for components, and that they were actually contributors to IBM's bottom line because they were subsidizing the component side of the operation. The deal isn't between the PC group and the component group, it's between Gerstner and the PC group. He allows them to make the argument, then says show me or you're toast. TTFN, CTC