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IBM, Compaq, and even HP have all adopted full-fledged direct distribution in some form or another. HP has tried to couple moves toward direct distribution with offers of additional support to resellers. Second,conditions in the PC industry have grown even grimmer since the case was written, especially as industry growth has slowed. The slowdown has brought Dell’s stock a bit out of the stratosphere, but the company remains the strongest in its industry. Dell appears to be using its strength to consolidate market share in the downturn.In the words of one financial analyst, “Dell’s only problem is that it has become big awfully fast in an industry that is growing quite slowly.”Third,PC makers are seeking greener pastures through diversification. Dell has launched Gigabuys, an online e-commerce site for computer-related goods. Compaq has invested in a number of online content providers. Gateway has begun to provide Internet access, computer financing, and computer-related service and training. The diversification efforts are a testimony to the unattractive structure of the industry.35
Matching Dell ConclusionAt the highest level, the case examines competitive dynamics.: e.g., the initial structuring of an industry, competitive convergence, an effective assault on a set of established players. Below that level, the case illustrates four threats to sustained competitive advantage. Imitation, substitution, hold-up, and slack all show up at various points in the case. At the finest-grained level, the case examines imitation in its variousforms—and especially barriers to imitation.36