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Msg  70073 of 388784  at  5/29/2008 6:49:25 PM  by

doggydogworld


 In response to msg 70066 by  W
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Re: Dell is on fire AH

The shift from desktops to notebooks is bad for Dell long-term. Dell's big cost advantage comes from their "no inventory" system. They take your money today and buy all the parts necessary to build your custom desktop a day or two later. If you buy a HPQ desktop at BestBuy today, on the other hand, HPQ bought the parts eight weeks ago in Southeast Asia. The eight weeks is spent in manufacturing, shipping, sitting in inventory in the distribution center and finally on the retail shelf. Since PC components depreciate 1% per week, Dell has a built in 8% advantage. They also don't tie up capital in inventory and AR, but that's pretty minor these days.

The above scenario doesn't really work with notebooks. The notebooks are pre-assembled in Asia and shipped over. Dell now gets hit with parts depreciation while the notebook is made, shipped and sitting in the distribution center. They still have an advantage in that parts don't continue to depreciate on the retail shelf, but we're now talking 3-4 weeks instead of 8. And this is partially offset by higher shipping cost.

This is also why Dell's side trips into big screen TVs and such never amounted to much. No built-in cost advantage. Dell will still do OK, but it's hard to see a return to glory.


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Replies
Msg # Subject Author Recs Date Posted
70075 Re: Dell is on fire AH Ralph 0 5/29/2008 7:03:21 PM
70122 Re: Dell is on fire AH batman10023 0 5/30/2008 9:31:33 AM
70132 Re: Dell is on fire AH W 0 5/30/2008 10:09:20 AM


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