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

To: Ian@SI who wrote (130865)	6/4/1999 12:41:00 AM
From: rudedog	Read Replies (1) \| Respond to of 176387

Ian - My point was not the overall superiority of DELL's business practices in the PC market - that has been demonstrated clearly. But if the "big 3" start a price war, DELL has a lot more to lose than they do for 2 basic reasons. 1 - DELL has to make money. No matter how efficient they are, competition with 3 companies who collectively have more than half the market, and also do not need to make money in the PC business to survive, will be ugly. 2 - such a price war would serve to increase the perception that PCs are a bad business to be in. Falling ASPs and margins, collapse of the overall revenue model as unit sales increase no longer offsets falling prices, would all lead analysts to believe that DELL was just the last rat to leave the sinking ship. And you know the big 3 would do everything in their power to push that perception, in the scenario we are discussing. DELL needs to pre-emptively work out of that box. They of course need to continue their path to dominance of the PC business, but their primary competition no longer has the same business constraints as DELL, and as DELL moves into the lead, the cost to DELL in a competitive price war will go up, while it will continue to go down for the competitors. One of the liabilities of being the leader... Something DELL as "underdog" has not had to contend with.