David, that's a fair question, let me see if I can address why I think you are wrong.
1. The PC penetration rates in homes around the world are still very low. On average the U.S. home penetration rate is about 40%. The nearest other country is Germany, not counting the east at about 30%. Japan's home computer usage is about 15%. All of Europe is averaging about 20%. Some of the most populated countries of the world are at far less penetration rates. India, China etc.
2. The PC penetration rates for corporations around the world follow a similar pattern. Just raise the rates about 30% in each area.
I believe we will see a day, in the not too distant future, where most nations home PC penetration rates will reach 40%. I also believe the developed nations of the world, U.S. Europe, and Japan will one day reach penetration rates of 70% or more.
This is the macro trend in which Intel will continue to grow and prosper.
As to your second point about profit margins on high end CPU's disapearing...The fastest growth going further for Intel will be as Fred has so eloquently put it, in the Laptop and Server marketplace.
The Internet has only just begun to penetrate the world. The user app everyone is looking for is right in front of them. The Net. Not everyone will elect to buy a fast computer to access it, but a million ISP's will need to continue to upgrade in order to fullfill the demand. This is Intel's real bread and butter going forward. If your going to spend 6 grand on a Server, you want to make sure it works well and dependably. Currently Intel has very weak competition in this area, therefore margins are high.
Lastly, The manufacturing processes to make chips is actually becoming less expensive (per chip) as Intel perfects the .25 micron manufacturing process. AMD and or NSM may be able to make chips which closely match Intel in performance, but can they keep up with the tremendous demands of improvement in manufacturing required to compete long term??
I doubt it and my money is still on Intel.
Michael |
