Hi Ken,
Just a couple of points that I disagree with you on:
"For a 'standard' PC, the price at which they can sell it is FIXED
by the market."
It's brand differentiation. Your statement would have made complete sense 3-5 years ago, but the mass consumer is a brand shopper. When they walk into a retail outlet they may have 3 to 4 brands in mind, or most likely they are looking for brand familiarity. I would bet you money right now that the two most recent entrants into the retail home desktop market - Sony and Toshiba will be huge successes this XMAS mainly because of their brand equity. Sure the bottom feeders are going to make their money on being basic PCs, but if you compare the price of Compaq, HP, IBM vs. an AST or PB I think you will see that market share is not determined by low price.
If I understand your statement about a "standard" PC being fixed by the market -- you are saying that it doesn't matter what the bells and whistles are, the market is paying a fixed cost regardless? If I interpreted your comment correctly, I would have to say that you don't understand consumer marketing. Consumers are gadget mongers, they buy what's cool, what's hip, what's the latest. Studies from IDC that track buying behavior at the retail level have consistently shown that consumers intend to spend about $2000 for new PCs. What happens is they get in a store and see that your "standard PC" is pretty boring when it comes time to evaluate the variety of PCs. so they start with the standard and add-on, sort of like adding a/c and a CD player to a new car. A sound card here, a larger monitor there, a little more ram, more hard disk space, or a cool zip drive. Also remember CD-ROMs weren't a required feature earlier in this decade.
And I would bet the farm against you that IOMG *IS* making money on the drives going out the door right now, how could they not be having ramped up from $149mm in 1994 to now?
I do agree with your earlier post and that we do need to manage our euphoria, but after taking shots from all the bears and shorts for the past few months I think you can expect a little gloating at this point. It's up to each individual to determine their own talk and their own walk.
take care and have a good weekend.
trakker |
