Hi John,
Since IBM's product sales cycle could be longer than software-only sales, this unfortunately, could imply any potential Y2k impact would be felt by IBM first.
But, I believe MSFT would most likely be in touch with their customers/market place, and since MSFT did not say they predict a Y2k affect, this carries weight, and might counter any possible lead-time IBM has in feeling any impact if their sales cycle is longer in large corporate accounts.
Another distinction: Enterprise buyer is not necessarily the same as the departmental buyer. Different segment here. IBM's buyers may have slightly different priorities in their demands, and possibly different buying patterns (sales cycle).
Another distinction: there's a difference between when an IT/MIS actually places an order for the equipment and when they actually (decide to) install the equipment. Has anyone seen a survey asking IT/MIS managers, "will you introduce something foreign into your system two to four weeks prior to Y2k?" However, this concern could be minimal as the stock is based upon when IT/MIT buyers make purchases, not when they install equipment.
Some IT/MIS managers are starting their purchases and installations well in-advanced of the Y2k (thus, an uptick in Q4). However, there's a balance of IT/MIS managers who will wait until after Y2K (thus, a downtick in Q4), and for some companies, the uptick+downtick could balance out. Intel said during their CC they expect these two forces to exactly balance each other out in Q4, with no resulting impact in the net. Intel has said both stories are alive and well.
If IBM's product-lines are not as highly demanded in the market place (and as an Intel investor, this would be my belief), this potential lack-of-strong-pull could mean the Y2k downtick becomes more visible, resulting in a noticeable Y2k impact which they would have to report, even though the underlying reason could be demand-issues-unrelated-to-Y2k, which time would eventually tell, and if so, it would become apparent in 2000.
In summary, I believe IBM's problem is a possible combination of:
1) longer sales cycle (which would exasperate a y2k downtick)
2) product-demand problem (unrelated to Y2k)
I think the future will be very good for MS & Intel due to products targeting the Enterprise market segment because according to MS's CC there are signs of acceptance in this market segment, where margins are higher, and Intel was mentioned as a platform, so I believe Intel will follow equally as successfully in this market.
Unrelated to Y2k, about MS... if Linux is taking bites at the Departmental segment, this could result in the Enterprise being stronger than the Departmental segment -- this question occurred to me immediately (too bad one of the Analysts didn't ask this question to clarify.) However, since MS didn't say this was why the Enterprise segment was stronger, but rather implied it was due to acceptance and adoption of their Enterprise NT solution (as oppose to a weakness with Departmental segment), I'll assume this is the case: that Enterprise solution of MS (with Intel platform) is being accepted in the market.
Amy J |
