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K, the lower component prices have definitely helped the pc makers this
quarter. In fact, that is the main reason Dell blew the doors off of
its quarter. With their low inventories, they were able to take
advantage of lower component prices that were falling even faster than
pc prices. I have often mentioned this as the reason I expect the
boxmakers to have one last good quarter, though Compaq and Gateway
and Micron Electronics
and Hewlett-Packard and IBM made that a very questionable idea with
their stinko quarters.
One more good quarter or not,
the large "absolute" moves in component prices
are over. 16 Mbit DRAM chips
are now selling for little more than half of what 4 Mbit Dram chips
were selling for last year. DRAM was once the most expensive part of
the box. It is now a nonevent, despite the extra DRAM in new models.
Ditto for SRAM, Flash, graphics chips and modems. The biggest
costs now,
Wintel Monopoly products, are not coming down in price. In fact,
Wintel is fairly well gouging OEMs on prices. When the OEMs cannot buy
elsewhere, that is what happens. So future drops in component
prices will
not keep up with drops in pc prices, and the margins, IMHO, will be
squeezed until they disappear. You are absolutely right that if most
US corporations upgrade next year, pc boxmakers, even with a huge new
load of competition, will print money. I just don't think that is
going to happen. Neither does Microsoft, which has lowered their
initial projection on No Tasks 4.0. But you have correctly identified
that business sales is the key to whether
I am right or the pc touts are right. You takes your choices and
makes your bets. Good luck, MB |
