Wintel's Demise Message Board

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Technology Stocks : Wintel's Demise

MSFT 517.03

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Nov 3 9:30 AM EST

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To: Punko who wrote (146)	9/13/1997 8:07:00 PM
From: Thomas Mercer-Hursh	of 328

I don't think your pricing expectations will hold up to closer scrutiny. Remember that PC components are way up the economy of curve scale already. In fact, if you factored out all of the middleman costs and got back to point of manufacture price, I think you would find that the factor which had a lot bigger influence of price, rather than potential scaling economies, was elevation of price early in the life of new technology to recover R&D expenses. This is certainly true of high turnover, high R&D components like the CPU. I also think you are mistaken about the configurability issue. If I am buying a Internet Appliance, I might well take an all-in-one unit with little flexability because my needs are low end and the cost so low that I wouldn't mind having to buy another one in a few years. But, if we go up the line to people who need some of the PC-like capabilities, but who are proposing to fulfill these with Internet applications, am I really going to want to buy something where I don't have the option to switch in new technology as it becomes available?

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