Dear Mary:
Re: "But the specious manner that you and pgerasi present your views disgust me."
Isn't that the last bastion of a doubter who can not back up one's claims?
Take the other tack. You claim that 25% of the $60B is CPU chips. That is $6.25 billion a quarter. Intel has what, 80% of this by your estimation, or $5 billion a quarter. That means that $0.5 billion supplies all of the PC market, the notebook market, all chipsets including those on both PCs and servers, and all other IAG products. That is an ASP of below $20 per chip for an Intel CPU. Far below than any Intel claims.
Get real! The only speciousness is in your arguments to the contrary. If they include any small PC as a server (my brother uses his home system as a web server) in their definition of the Server Market (untrue, big time!), then you might have a chance of double digit percent. But even PCs have a CPU costing (actual cost to the OEM) far less than 25% of the total cost of a system (keyboard, monitor, case, box, printer, speakers, power strip, disk, graphics, CD, DVD, MB, memory, sound card, etc). Their $1,000 PC system has a less than $100 CPU in it! Even for a average home user.
The fastest PC at work is the Pentium III 600 in the local mail server. The server cost $5K but the CPU cost (at the time purchased) $300 (we buy many CPUs for the turn-key telephone servers we build). None of these costs include the software (although Win9x or NT is typically installed with a slew of software in a bundle (ostentially free but, we know otherwise)).
Your estimates are clearly too high! Ours are more reasonable for the traditional server market which does not include PCs, workstations, and systems with delusions of grandeur like calling a garbage man a "sanitation engineer". The only question is where did IDC place the line? If it stopped at the traditional line, CPUs are in the low single digits at best. That means mainframe and supermini types of systems. The next step down is to include workstations (do they split workstations into a separate category?). The next step down is to include what are typically known as high end PCs. I do not think it would include a 386 serving web pages or a board stuck into the back end of your departmental laser otherwise known as a "print server".
If so, $60 billion is too small a number per year, besides, I thought IDC has a market for PCs, another for notebooks, and maybe one for workstations. If they had separate categories, you would naturally assume that a system, more fitting another market, would be accumulated for that other market and not the Server market even if it is doing some server type job! It is very difficult for IDC to actually determine what a system is used for. If they do, then the simple act of installing Linux on a box would cause the box's hardware to be part of that Server Market. I do not know how they would handle a multi-boot machine either.
The further down the power and prestige chain we go, CPU chip margin percentages go up. But, they will never rise to 25% of overall system cost (a single system or two may be an exception but, the aggregate market will not). I am sure that you think that when you pay $1.00 for gas, all of it goes to the oil company (a lot goes to the State and Federal Governments, some is kept by the gas station owner, some to his distributor, and only what's left goes to the oil company). Why do you assume that all of the money goes to the CPU vendor? Your failure to answer these questions must mean you do not like the answers and what they do to your arguments. If Intel gets their list price of a CPU, then why can I get a far lower price by going to Pricewatch, Best Buy, or even my local "screwdriver" computer shop? It is the very same reason that a $10 steak at a local restaurant, costs me $2.00 when I go to the same grocery that they use.
So take your specious complaints away and argue real numbers!
Pete |
