People are paranoid about interest rates. Their hysteria over interest rates reminds me of their irrational behavior over Y2K.
The year 2000 came and there weren't any serious problems.
Probably, the interest rate increases will slow car and auto sales. Shoppers may pay off credit card debt because of higher interest rates, but technology prices continue to drop.
The demand for technology will not decrease. As Brian Kerecz pointed out on this thread recently, PC prices have dropped significantly. Prices will continue to drop as new technology is introduced into the marketplace. The newer technology, especially the Internet connected devices, need not cost a great deal.
Folks must realize that the Information Age is in its infancy.
"We are now experiencing only the beginning of the amazing growth that is projected for the years ahead. Consider a few statistics that illustrate its magnitude.
.Every time you connect to the Internet, it requires more than 500 semiconductor chips to get you online. Internet usage is expected to climb from 200 million users today to 500 million users by 2003.
.Currently there are 220 million Internet connected devices. This figure is expected to grow to 720 million by 2003.
.Sales of PCs are also booming, as they are still the most popular way to access the Internet. PC sales are expected to increase more than 70 percent, reaching approximately 200 million by 2004, compared to 118 million in 1999." (AMAT 1999 Annual Report, p.13)
Prices of work stations drop as well. We never thought it could happen but it is possible that we may be able to replace our old 486 PC with a low-end Sun work station. This would have been unthinkable a year ago!
The good news is that PC prices will continue to drop so more and more people can afford them. And, if they don't buy PCs, they may buy one of the many inexpensive gadgets that will allow you to connect to the Internet.
Eventually, prices will drop to a level that people's homes will be networked. You'll program your security system, your heat, your lights, and even the time your coffee pot begins to perk in the morning. I believe Nokia has been running pilot projects in this area.
Texas Instrument's CEO said on tv recently that the Dick Tracey watch is almost here. I believe him!
If inflation increases, I doubt that it will affect the sales of PCs and other Internet devices because their prices drop as newer technology hits the market place. Also, last I heard, Nokia still expects 50% growth in cell phone market.(Cell phones use chips and AMAT manufactures chip making equipment. They build more chipmaking systems than any other company in the world)
In my opinion, I think investors should relax, I don't believe inflation will not increase substantially. You'll still be able to buy your Nokia phone,your Palm Pilot and the other gadgets in the market place.
Cheers,
Mephisto |
