Sid - Excellent post. You put into words what has been a fear in my mind really this whole year. I follow networking, computer OEMs, and component suppliers mainly, and the overcapacity built up there is simply mind-boggling. Just in the networking sector, the signs of overcapacity are there.
The networking equip sector has been attracting new players at a steady rate, and large, established companies are increasing their networking equip product lines. These companies include 3Com, Intel, H-P, Compaq, and now Fujitsu, to name just a few household tech names. In addition, the grandaddy of networking, Cisco Systems, wants to continue to grow at roughly 30% annually, or whatever the industry growth rate is/will be.
Maybe everyone in this sector will indeed keep growing at a blistering pace, but the laws of supply and demand say that eventually there will be too many players, too many products, and price cutting will follow. Indeed, the NIC and RAS have already seen downward price spirals in the last 11 months.
I'm not real good at a deep discussion of details, but the symptoms of overcapacity are quite plain for all to see, at least in the networking sector. It's bothersome to me that so many companies are staking their growth plans on networking equipment. It's the "all the eggs in one basket" type of thinking, and the necessity and pressure of success is that much greater.
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