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Politics : Formerly About Applied Materials

AMAT 327.01

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Jan 16 9:30 AM EST

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To: Barron Von Hymen who wrote (10534)	11/8/1997 11:28:00 AM
From: davesd	Read Replies (1) of 70976

**OFF TOPIC* Barron...you are missing the reason for NETPC's....it's not because they are cheap that makes them attractive....it's the cost of ownership of the netPC...you don't need Win95 or all that other high maintenance software on the desktop....it all sits on a powerfull remote server. A PC with no CD or small disk, etc still needs the maintenace of a regular PC therefore the cost of owership is about the same as a regular PC and the purchase cost difference is minimal. I think the Gartner group has shown that the cost of buying a PC is only about 15%-20% of the total cost of supporting a PC in the workplace the rest is keeping the PC and software running. The NetPC is supposed to drop this cost significantly. On the other hand Net PCs will require faster networks. INTC has to lose margin on the low end MPU's....They have always dictated direction and the cost of the MPU....this is the first time in their history that they have not been able to dictate the direction or the cost of the MPU...In the low end $1,000 market...AMD and CYRX are serious competitors that INTC has to deal with. INTC would rather sell PII chips than 166MMX chips due to the margins. Now they are being forced to scale down their PII to meet the customer needs and price. No wonder INTC is guiding down the margins from 62% to the 50% area over time. dave

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