Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (57117)	4/23/1999 11:27:00 AM
From: Dave Feldman	Read Replies (1) \| Respond to of 132070

Michael, Re: sophistication and Gateway/Dell I think you can make analogies between the auto business and computers. With autos, one might assume that the BMW customer is more sophisticated than the Geo buyer. And in many cases, one would be right. But in the computer field, there will always be many folks who are extremely knowledgeable techically. To those people, Dell and Gateway will always be overpriced duds, the equivalent of the Plymouths their parents would drive. I've talked to quite a few buyers for businesses and to the person they sing the praises of Dell. The two big issues with them that make them buy Dell -- reliability of the machines (NOT performance) and Dell's willingness not to nickel and dime them when there are service problems). But I don't think Gateway is as low-end as you say. Their "psychographic" seems closer to Volkswagen/Snapple/Land's End -- a deliberate strategy to be anti-hip, anti-extreme hi-tech. Dell buyers feel that they have made a sound purchase. Gateway buyers feel happy about their purchase. I think the real low-end is Value-Vision, and the PB system at Staples, not Gateway. DF

To: Knighty Tin who wrote (57117)	4/23/1999 1:19:00 PM
From: gbh	Read Replies (3) \| Respond to of 132070

We have seen MUEI faltering Michael, second tier. Forget about these guys. No hope. Only the biggest will survive the shakeout. This means only GTW and DELL, from the direct side. Each has its own well established niche; DELL business; GTW home. They are going after each other now, and if I was betting (oh, I guess I am <g>), I'd bet on DELL. and Gateway moving away from it by building the showrooms. BTW, when the general catalogue retailers built a lot of showrooms, they were only one step away from eliminating their catalogue sales. Stop with this stuff. GTW and DELL are not moving out of the BTO business. We both know carrying inventory in PCs is death. Don't you think they know it. GTW stores is just a marketing tool. Don't read anything else into this. Dell has done well serving business and high end buyers. In other words, folks who don't mind overpaying or waiting for delivery. Please stop with this overpaying "myth". Both DELL and GTW are cost competitive for equivalent function. The fact that they don't compete where making money is impossible is just common business sense. As far as waiting for delivery, yes, a computer buyer must wait to get exactly you you want. This is true whether I buy from DELL or the local mom and pop shop. I totally disagree with your depiction of the avg. Gateway consumer. "Sophisticated?" Not according to their ads. My guess was that they were the lowest of the low. The folks who were willing to accept poor reliability and high prices because Gateway would give them credit when nobody else would. This is just a new marketing program targeted at a different set of buyers. The facts is this; until recently, you never would have heard of GTW or DELL unless you surfed the net and clicked through an ad (only sophisticated buyers would do this), or unless you read PC trade rags (only sophisticated buyers would do this). I am just not certain it is profitable in the long run. And we have yet to see what happens when the trade-ins occur and when the defaults mount. I agree with you here. This reminds me of CHS when they reported gangbusters numbers while the rest of the channel cos. were hitting the wall. Comapring CHS to GTW or DELL is kind of silly. I am of the opinion that direct is killing the resellers. Obviously, every box DELL, GTW and Micron sells is a dagger to them, but now they are competing against CPQ and IBM and HP to some degree, and this will only get worse for them, IMO. Gary