Well, I have to commend Chuck for his thriftiness. The Fools over on our Living Below Your Means board would certainly applaud his finding of a cheap computer deal on a "PowerSpec" over at "MicroCenter" -- though I suspect that few Americans have ever heard of either one.
And that's actually my point. Are these stores? Products? Order-by-mail advertisements in the back of a comic book? I really don't know. But I do know Dell
Listen. I've got a buddy, Greg, who tells me that one of these days, he's going to build a digital video recorder out of spare computer parts to avoid paying monthly fees to TiVo
I don't. Low-margin and sub-zero-margin players exist in any sphere of business. Like a flea biting a dragon, they're less than a nuisance.
And speaking of dragons ...
Chuck goes on to argue that Lenovo and its China-based business model will undercut Dell's margins. Hello! Dell already sources its components from China and other low-cost providers -- and maintains a profit margin four times the size of Lenovo's in the process.
Let's get down to basics
In the end, Chuck seems to be saying that unless Dell sells its products cheaper than anyone else, it's going to lose. I argue the opposite. I say that Dell's so good, so efficient, and so well known that its reputation and brand name enable it to sell computers at higher prices than others can charge. Dell shareholders then reap the benefits of that pricing power.
Or in other words: Buy Dell.
Fool contributor Rich Smith owns shares of Dell but not of any other company named above. The Motley Fool requireswriters to disclose their long and short positions in any company we write about and to refrain from trading in any stocks we write about for 10 days before and 10 days after publication.