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Technology Stocks : Intel Corporation (INTC)
INTC 48.31-0.8%3:59 PM EST
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To: BelowTheCrowd who wrote (171282)9/27/2002 1:25:23 AM
From: Dan3  Read Replies (2) of 186894
 
Re: Elimination of competition won't make a whole lot of difference as to what people are willing to pay

A very large percentage of computer purchases are for businesses and cannot be deferred. The CPU isn't a particularly large part of the system's cost, these days, meaning that Intel sees a fairly inelastic demand curve.

Consider that Microsoft's gross profit on a typical desktop sold today is something like $250, while Intel's is close to $75 - note that Microsoft's marginal cost for OEM windows + office is near zero, while Intel has to ship something.

If Intel had a monopoly as strong as Microsoft's, they'd almost certainly be able to double their gross margins, and probably triple them.
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