achieved the same synergies as has Dell. It is interesting that Dell has been able to achieve a disproportionate growth in its market share for its portable-computing business segment. This fact will position them to use the same pricing strategy in a growth segment of an overall mature market.Dell is in a good position to continue capitalizing on its overall strategy of aggressive pricing, increasing market share exponentially and extending the Dell Direct Model into all product segments of the business, both domestic and abroad. Dell seems to be in a position to keep costs in line with the narrowing margins created by competition and aggressive price-cutting. Dell needs to be able to predict and pass on the benefit of the price cutting of components from suppliers and stay in control of inventories. This strategy could be bad news for shareholders in the near term as profits are squeezed while at the same time cash generated by operating activities must be channeled to constantly evolving the higher margin product lines such as PC servers, peripherals and notebook PCs. This alternative is in line with the current Dell strategy. Many of Dells competitors in the home PC user market use the retail outlet to market and distribute its product. In recent years the bare bones models have posed a challenge to Dells comparable products offered online. Dell is showing every indication of going after that market by deeply discounting its competing product line. The danger for Dell is obviously an erosion of margin on an already low margin business. I believe their current market position, and the business fundamentals all point to moving forward with their current strategy. The Dell Direct Model gives them the vehicle to beat the competition. The model must be constantly refined to assure that they can continue to gauge customer needs better than the competitors and to continually adjust their cost structure and production rates ...
