A lot of computer companies are having difficulty competingwith Dell because they think they're competing with a computer company. Thetruth of the matter is they are competing with a bank. Let me explain.
First you have Dell Computer here, who is in the middle andthey have a bunch of companies that supply them with products, so around herewould be a company that makes hard drives like Quantum or maybe somebody likeIntel that makes processors, or different companies that make power supplies,all the parts that go into the computer. Now when you call on the telephone,here's your little telephone and you call into Dell and you say, "I wouldlike to have a nice little desktop computer." They take these parts thathave just arrived, just moments before you made that phone call and theyassemble it in a computer and they ship it back to you and here's this nicelittle box with Dell on it. It's got that sideways, eeh, I can't really produceit here, but you get this box as it turns out. All of these parts that wentinto that box, Dell doesn't have to pay for those parts for at least likeanother 30 days. Meanwhile, they already have your money because you gave themyour little credit card with that little security code on it and everything.They took your money already. This is why I call them the Bank of Dell. They'remaking so much money on the float that they don't have to worry about making aprofit on the actual parts and all of the computers and everything.
Now if you are IBM or you are HP, here's IBM and HP, youhave no way of competing with this model because you think you're competingwith a computer company when indeed you're competing with a bank. Okay and it'svery hard to compete with a bank when you are a computer company. IBM hasnothing like this set up. Neither is HP. So what does IBM do? Well, IBM says,we're going to send our whole PC operation over to China and what's left isthey make a bunch of servers. Now if they ask me, HP is not far behind. Those guysare in a significant amount of stress. They just let go of their CEO, CarlyFiorina. They're going to have to figure out how to restructure the wholecompany to survive. What that means is they're probably going to send their PCsover somewhere, maybe to Singapore or India or somewhere else like that andthen what's next? Well, Dell does all the same stuff with their servers too, sopretty soon we'll push the servers over to China for IBM and servers for HPover to Singapore and next thing, you know, we got one big massive computercompany. I'm sorry it's a bank in the United States and we call it Dell Computer.
