Capellas never said that
In the response to one of the questions from analysts after earnings, Capellas said that Revenue from the Commercial PC group was down to about 30% of overall revenue, and that he expected that trend to continue over the next few years as enterprise sales and consumer sales continued to grow. The analyst then questioned if this meant that CPQ would not defend its PC share leadership, Capellas said on the contrary that they intended to "take the battle to the streets" and drive both share and unit volume, but that they would do that profitably even as percent revenue contribution from this segment fell. It was during this section that he said something about that percentage heading to half of its current portion over the next few years. At the time most people assumed that meant that CPQ would avoid deep discounts in order to restore profitability, but the introduction of the iPaq two weeks later put a whole new perspective on his remarks.
Taking CPCG's current revenue decline of 12% year over year, and the consumer group's growth of 15% and ESSG growth of 7%, it would not take long to see CPCG revenue hit 15% of overall if present trends continue. If we take your statement that 20% of commercial desktops would be iPaq, the revenue decline for CPCG would be accelerated given that current CPCG ASP is over $1400 and iPaq is closer to $500. But one must assume that the rest of the commercial desktop price model will follow the iPaq down, at least getting under $1000...
So in that context, Cappellas' remarks make perfect sense to me. |
