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

To: arthur pritchard who wrote (127797)	5/22/1999 12:07:00 PM
From: Meathead	Respond to of 176387

Arthur, maybe you could elaborate on this arrogance issue. What aspect of the IBM deal was a strategic ploy to overwhelm IBM? The deal, if carried through to completion is a win/win for both companies. Dell has procurement issues and IBM is a high quality supplier of display technology and disk drives... IBM, like Intel, can deliver the volumes necessary while satisfying the quality targets necessary to fuel Dell's growth. For Dell, this deal also reduces the complexity of dealing with multiple suppliers for certain components and provides volume discounts. For IBM, the benefits are obvious. Reducing the supplier base and partnering with the heavyweights has been an ongoing corporate strategy. Imagine the internal churn if Dell were to use CPU's from Intel, AMD, Cyrix etc. and chipsets from Intel, VIA, AMD, Reliance etc. Development and procurement complexity goes way up and field quality metrics get ugly. Yes, IBM and Dell are in different leagues. But the statement that Dell is not ready to overwhelm any part of IBM is misleading. 15% of IBM is it's PC business... that is considered a “part”. It's obvious Dell has overwhelmed IBM's PC business over the last 10 years in terms of growth and profitability. Hence, the reason they are in different leagues is the remaining 85% of IBM's business where Dell only partially, or doesn't compete with them at all. In my book, deals like this aren't arrogant... just fundamentally sound business practices. MEATHEAD