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Technology Stocks : All About Sun Microsystems

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To: JDN who wrote (26984)	1/30/2000 11:36:00 AM
From: rudedog	of 64865

JDN - the units continue to grow - it is the RATE of growth that is declining. In the early 90s, broad use of PCs as terminals (replacing dumb ASCII terminals and 3270 IMB terminals) drove triple-digit unit growth - but once that legacy base was replaced, the growth began to decline. For a while unit sales were driven by the increase in processor power as 386 and 486 machines were replaced by Pentium, larger memory and multimedia capability became standard, etc. But in the late 90s, IT departments began to extend replacement cycles - how much power does a productivity user really need to run word and excel? between 1995 and 1998, the average time in service went from 18 months to 36 months - that's got to cut into unit growth and is a model which would over time imply zero unit growth... CPQ has a very strong position internationally and the direct sales model has not made big inroads yet outside of the US and some areas of Europe, particularly the UK... that is as opposed to direct distribution, which is always more efficient... This trend has been well analyzed over the last 5 years and most of the major players have been taking steps to account for it in their business model. DELL is in that sense farthest back on the curve, as they have put most of their wood behind the PC arrow, assuming that they can continue growth for a while longer simply by stealing share from the other guys.

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