Moats and Boats: Groupon Inc (GRPN), Dell Inc. (DELL)

Dell Inc. (NASDAQ:DELL) – The first computer that I could truly call mine was a Dell.  I saw the commercials.  The thing I loved about Dell’s business model then was the ability to customize your computer while still getting a great price. Soon, though, other companies figured out how to replicate.  Dell certainly did have a moat, but the “durability of that advantage” (in Buffett’s words) was lacking.  Computers, all running the same software (Windows), became a commodity.  If Dell couldn’t offer the extra storage I was looking for, I would check out another manufacturer.  It was recently announced Dell would be taken private after losing over 70% of its value from the days of “Dude, you’re getting a Dell”.
Moat: Cost advantage

When analyzing investment opportunities, it is crucial to analyze the competitive advantage the company has over its competitors.   Not only should a potential investment have a wide moat, but it should also be taking active steps to protect the castle by widening its moat or at least putting alligators in the path of those looking to take down the castle.

The article Moats and Boats originally appeared on Fool.com and is written by Robbie Laney.

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