Maui,<<<I read in one of the gazillion articles about Q-INTC deal that 1 million Alphas ship (I doubt if this is annual shipment by compaq). If 50% of these are replaced by Itanium (Avg ASP $3000), this would give about $1.5B to Intel (most of which adds to the bottom line, since margins would be very high on these).>>>
The problem with most of these reports (either from news reports or analyst reports) is that the writers have very little knowledge concerning this market. They probably know even less than most of us on this thread.
They frequently confuse server systems that include storage and network hardware with the server (processor) itself which contain the Alpha chip.
In this case, I believe it is quite simply 1M servers that CPQ sells each year containing the alpha chip whose ASP is a lot less than $3000.
Sometime ago, you posted an article:
<<<Here are the revenue projections for server-processors (hope the projections are not revised with the market downturn): The market is big and is certainly up for grabs. According to a server-processor revenue forecast from JS Bancorp Piper Jaffray, revenues from IA64 processors are expected to reach $25 billion in 2003. Revenues from RISC processors are expected to remain flat for the next two years and actually decrease to $35 billion in 2003. The total server processor market is expected to reach $89 billion in 2003. >>>
Most here (on this thread) questioned the ramp. But, I don't. This forecast comes from Ashok kumar who I believe is quite knowledgeable from a technical perspective. He is probably more techie than financial analyst and I don't think he throws out these numbers casually.
In the high end server market, CIO's generally can predict their spending (budgets) two or three years out - so that the size of the server market is very predictable.
Ashok Kumar, I'm guessing, made some assumptions and then made his forecast. I don't think he went too far out on the limb on this one.
Without even having knowledge of the CPQ-Intel deal, Kumar could have made the assumption that there was no future for CPQ to continue investments in R&D and manufacturing and where they could see better results in concentrating on services.
It was a no brainer. Like in old time western movies, the slick new CEO at CPQ saw the hand writing on the wall. He was being run out of town in the the server chip market. So, instead, he went out and ran in front of the mob pretending he was leading the charge.
Mary |
