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Technology Stocks : Intel Corporation (INTC)

INTC 36.82

+1.5%

Dec 19 9:30 AM EST

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To: Rob Young who wrote (136140)	5/26/2001 9:26:27 PM
From: tcmay	Read Replies (3) of 186894

Box makers often have no choice! >from Rob Young at May 26, 2001 8:08 PM >I guess the thinking from many OEMs is they will grow >their Unix share. But I think Sun (among others) must >have seen the handwriting on the wall and backed away >from Itanium for the shrinking margin reason. > >Two, three or so years from now ... how much hardware >do you think HP will sell if their HP/UX IA64 product runs >just as well on Dell based servers and the Dell box is >30% cheaper? An interesting point, but the rejoinder is: neither Sun or H-P nor Dell would have a choice in the matter. You raise the possibility that Sun pulled back from the Itanium deal because they feared a flood of low-cost 64-bit server boxes. Well, if there _IS_ such a flood, will Sun somehow be magically protected from the overall competition? This is kissing cousin to a box maker in 1984 saying to themselves: "There's going to be a flood of these low-cost boxes made with Intel processors. I think we'd better just stay safely in our niche where we sell non-DOS machines for a lot of money." This didn't help them as the world adopted DOS/Intel en masse. If in fact Dell and Gateway and H-P start selling "commodity 64-bit servers," Sun can no more hide than Fortune Systems could hide in 1984. I'm not saying the 64-bit Unix/Oracle/transactions server market is the same as the PC market was, but there are strong similarities. And the history of companies hiding because they feared head-on competition has not been bright. Sun probably has their own reasons for not pursuing the Itanium with as much vigor as Dell and H-P are, but keeping protected profit margins is probably not it. >A complicated scenario all around but I believe that many >are making big fat margins on their boxes and wish to >protect those margins as long as they can. "I expect people in Hell want ice water, but that don't mean they're gonna get it." (Jessica Lange in a movie from the 80s.) >Solaris is the de facto Unix (judging latest market share >studies for growth and total numbers). They have grown >that in the face of marginal performance. They would be >foolish to give up those high margins on the UE10000 as long >as they are selling them. We could be seeing a kind of replay of the Macintosh history. Sun might do much better to leverage its Solaris OS on the lowest cost hardware boxes they can find. --Tim May

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