C4T:
While it is much too early to be putting out any definitive forecasts for the upcoming Christmas selling season, the early indicators I like to keep track of are not promising. here is but one example (and I will post more over the next two months).
-PC unit sales were up mildly as we got into the back-to-school part of the cycle (Fred Hickey notes that this may be attributable to the tax cheques mailed out in late summer), but price cutting is already endemic (which suggests that retailers are already worried) and unit sales are already starting to fall off. Got crushed margins?
There has been no evidence of any rebound in corporate PC purchasing. Without a resurgence here, there is simply NO possibility of a consequential "rebound" in PC sales (historically, corporate PC sales used to represent over half of total PC sales). The talking heads on TV yap about the coming "replacement cycle", but I don't agree. Budget cutting is endemic across corporate America and IT budgets have taken their share of these recurring "hits". Additionally, corporate head counts continue to shrink, which means that aside from the many PCs collecting dust sitting in closets, even when a round of replacement is deemed to be required, fewer boxes will be needed. But of greatest inport from my perspective is the fact that there are simply no new "killer applications" showing up and as far as I can tell, none are even poking up above the grass blades, even at the "garage level". Corporations just don't feel any need to upgrade.
With respect to the PC distribution channels, I am already starting to see signs of "tennis balls in the toilet bowls". Distributors have long since learned the nasty lessons related to keeping track of end-of-channel sales (i.e., at retail) and are wary of filling their warehouses to the flourescent fixtures. They are carrying "size" as we speak and the product movement is not what they have been hoping for. There are also large inventories in the PC manufacturing base as well as in semi land. If the plumber doesn't arrive soon, we are going to see a serious intensification in the already well-established PC price wars (probably before American Thanksgiving). Price wars are not the stuff of which second half 25 to 30% increases in profitability are made. (g)
Best, Earlie |
