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Technology Stocks : Micron Only Forum

MU 263.78

+4.5%

Dec 10 3:59 PM EST

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To: Peter Shaw who wrote (16038)	6/27/1997 3:57:00 PM
From: Imran	of 53903

I'm glad to see all the bulls getting all excited over MU's "perceived" transition to 256. But is a move like that REALLY something to get excited about? The reason why MU dropped costs so fast on 16mb was because of economies of scale. When Koreans started their transition to 64mb they stopped making 16mb en masse thus a vacuum was created in the supply chain, a vacuum which MU filled. Production volume went up, costs per unit went down. MU realized the same trick wouldn't work on 64mb for a long while so skipping 64mb altogether seemed like a better alternative. The next couple of quarters will be a disaster as MU goes through the transition phase to the next generation (as Skeeter and others have pointed out), if MU skips 64 and goes on to 256 my guess is that it will be a bigger disaster. Why? There is no market for 256mb. The biggest memory eaters are games, nothing else even comes close. There is no game CURRENTLY on the market which requires more than 16mb on a windows environment. Take a game like Tomb Raider. 8mb is the minimum requirement, 16mb is recommended. However 32mb will give you better gameplay but more than that doesn't really make a difference in game performance. Looking at E3 gives you an idea on the next generation of games and whereas hard drive requirements are going up, memory requiremnts are staying the same i.e. 16mb. These are the games coming out NEXT YEAR. My guess is that even by the end of 1999 memory requirements won't go beyond 32mb for even top of the line software. If MU does produce 256mb, how many people would buy all that memory when more than 64mb just isn't required? Which means MU wouldn't be able to achieve the economies of scale required to be cost efficient. They would have to wait a long time until the market shifts to 256. Under ideal circumstance, like this quarter, the best MU could do was $.44. Keeping this in mind next year even a $1.50 looks speculative (Burlap's 4.05 is an insult to intelligence), my guess is that they won't even make $1.00 next year. Maybe they won't make a dollar over the next SIX QUARTERS. Of course all of this is IMHO <g>.

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