Gene: "When you consider that only 2.5% of the world population is currently connected, ... 1 billion PCs by 2010"
- 2.5% is a very low penetration rate. Translates into: market opportunity for Intel.
Re:"2/3 of world wide"
- may want to factor in growth of population into the calculation, which happens concurrently.
Re : "what if" spread sheets that showed 1 billion PCs by 2008. Used 10% annual growth in PC ships with an arbitrary attrition of older units. The problem with that model is it disregards demographics."
- How about using: 15% or 20%, w/ a % of attrition at 3.5 years, and two ASPs (lower-ends and higher-ends.)
Re: "In one model I have 170 million PCs shipped in 2008 at an ASP of $300. Probably not an unreasonable assumption for 2008. But that's a crummy $51 billion PC business. (Less than half of 1998)."
- 170M units is way off (too low). Also, I'd make 2 ASPs. Also, I'd factor in the new e-commerce, website, etc. Server sales.
Re: "Isn't that the nature of a commodity business?"
- Gene, a complete commodity market at only a 2.5% penetration rate would be quite unusual - usually complete commodity markets occur when the penetration rate is much, much, much higher. 2.5% is just starting out. More importantly, in your calculations, I'd include the PC Server business: imagine how many servers (website servers, etail processing servers, telephony and multimedia servers) are required for 2.5% of population with connected PCs. Take that number and multiply it by: How many servers will be required when the 2.5% penetration rate becomes 50%? Seriously.
Consider the following analogy: many software companies would essentially give away for free their client software in order to make a killing on the server software sale. More software clients, more clients connecting to the server, which translates into more server software sales. The more the clients, the more the servers.
Your calculations seem pretty focused on the client PC machine. I wouldn't focus exclusively on the consumer PC calculations, but I'd take a look at the enterprise server PC sales, especially as the 2.5% number changes to 50% and consider how this will impact server sales (e.g. e-commerce server, website server sales, etc.) I'd also factor in two demographics on the client/consumer PC.
Amy J
p.s. Let AMD take the low-end market. Let them give away their product at cost. It'll hurt their margins and it'll proliferate a fabulous high-margin Server market. For Intel. Got to love AMD - they keep making it better for Intel. |
