John -
Legacy-free systems...are they going to have enough memory to handle Windows 2000?...
These are not "stripped down" machines in any sense - come standard with 64M RAM (MSFT's "recommended" amount for Win2K desktops), ethernet, etc. The difference is that the "PC Slots" are gone, replaced by USB (which does Plug and Play a WHOLE lot better). By way of comparison, the base iPaq (you can get this from directplus.compaq.com ) is $499, and includes 64MB RAM, 4.3GB disk, 3D graphics, audio, Win2K, CD and so on. A Dimension equipped to the same configuration (DELL website, delete monitor, upgrade to 500MHz Celeron, select NT (Win2K is not yet an option for Dimension but will be at the same price as NT), select 4.3GB drive) is $1065, more than twice as much... and no USB. That's a pretty big difference.
Upgrading both systems to 128MB RAM gives $624 for the iPaq, $1,174 for the Dimension. The Dimension is still almost twice as much.
I don't think you would argue (against the direction of this prediction) that we are going from 25 to 100 million PCs in the next 8-9 years......
John, don't quite understand this - we are already at 100M PCs per year... Growth in units projected to ramp down from current 19% or so to maybe 15%... not even enough to offset the decline in ASPs in this space, so in revenue terms, the market may shrink by 20% or more per year.
someone has to make them (PCs)...and Dell can do it profitably.....
I agree 100% - DELL is and will probably remain the low cost producer, and will continue to gain share. But given the revenue dynamics of the PC space, that is still not the big growth business that DELL needs to maintain and grow share price, it's more of a cash cow. If DELL remains focused on their "core business", and they actually achieve 50% market share in 5 years as MSD claims (which I regard as impossible BTW - 30% would be astonishing), the revenue growth still does not look good in comparison to past years. Let's do the numbers and see what I mean.
5 yr. growth rate of 33% p.a. (revenue/earnings) still looks possible to me...Not to you?
The 1999 PC market looks like about $200B on about 115M units, for an ASP of about $1750. Projecting declines in ASP of 20% per year and growth in units heading from 19% this year to 15% in 2005, we get to an ASP of $570 in 2005 at a unit run rate of 250M units, and I think the unit numbers and ASPs for PCs in 2005 are way high, since much of that functionality would be replaced by other kinds of non-PC devices. But taking the projections as they stand, and accepting MSD's claim of half of the PC market by that time, they would be at $72B.. a 33% growth rate would require them to be at $108B... you see the problem...
As far as the merger goes, I think DELL will HAVE to acquire some of the smaller players and perhaps also the PC business of some of the majors to achieve anything close to the 50% market share.
edit - BTW I don't expect DELL to sit around and let this happen... I still think 30% is achievable but not with the present business direction. |
