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eWeek: Reversal of Fortune

Oct 11, 2003, 04:00 (23 Talkback[s])
(Other stories by Eric Lundquist)

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"Did Wal-Mart help keep the united states from falling deeper into economic trouble than it did? Matthew Szulik, chairman and CEO of Red Hat, thinks so. "I have great personal admiration for what Wal-Mart has done," Szulik told me during a recent breakfast meeting. Wal-Mart's combination of high value and low cost for the customer, thanks to precise inventory control, helped keep consumers buying during the recent downturnâ€"and has a lot to teach the high-tech industry, Szulik contends.

"Szulik may be right. In the past, it was the technology industry that was supposed to be teaching the old-line companies about doing business in a new century. Amazon's ability to keep you updated about the status of your purchase led business executives to rightly question why their company's manufacturing and purchasing systems couldn't be as simple and reliable as an online bookseller's operations. Now the tables have turned. As Szulik pointed out, the technology companies that can create both a lower-cost purchasing threshold and a higher perceived value for their products in the customer's mind can build a gap that competitors will find increasingly difficult to bridge..."

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