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

To: D.J.Smyth who wrote (129671)	5/28/1999 2:21:00 PM
From: rudedog	Respond to of 176387

Darrell - I think DELL is a great company - that's why I am a shareholder. But all of the areas you mention are places where DELL is playing catch-up, not where they are leaders. We do agree that CPQ spends too much for R&D and I like DELL's R&D strategy just fine. But that strategy means that DELL will have products when the market for those products already exists. DELL lets companies like CPQ and IBM do the "heavy lifting", watches what is taking off, and then does a focused offering to get market share. They "surf the wave", they don't "Make the wave". But no one should be confused about where DELL fits in the market - great execution at the point where the "volume ramp" starts to happen. Why was not CPQ and HWP johnny on the spot with this innovation which has helped drive Dell's server sales? CPQ has been a technical leader in cooling technology in their high end servers and has driven the high density server market for more than 5 years. They currently manage twice the density in server packaging in comparison to DELL. CPQ offers a 4-processor system in a rack mount form factor which is half the height of DELL's. The reason customers were pressing DELL for a smaller form factor is because of CPQ's high density line. I bought one of CPQ's DSL-equipped systems for my daughter - she ran the installation wizard and had DSL service within 30 minutes of opening the box. No added equipment needed and hookup and line verification was automatic. GTE provides coverage for CPQ's DSL for more than 60% of potential users in the US. CPQ is also an investor, along with MSFT, in roadrunner, and provides equally seamless installation of cable-modem capability. They also provide out-of-the-box satellite internet links, although you have to buy the satellite dish and converter separately. This was announced in November 1998 as a part of the "triple play" initiative. Since the system I bought was less than $600, I don't see where the extra cost you refer to comes out - DELL does not have an offering at that price. If DELL can continue to get half of CPQ's market with 1/10th of CPQ's R&D, who can argue with the strategy? But this means that DELL will always be a little behind on "breaking into new markets" since they necessarily wait until the market is somewhat proven.