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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!
LRCX 217.89-1.3%Jan 23 9:30 AM EST
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To: Ian@SI who wrote (4317)1/5/1998 10:38:00 PM
From: Jay M. Harris  Read Replies (2) of 10921
 
Ian,

The current trend (last 6 months) does not support your 10% thesis. I saw a recent estimate that 43% of household purchases were sub $1,000. Remember, that while you and I are in a social segment that can afford a $3,000 PC, most households can't. This is the market that Bill Gates is trying to unlock. There is profit in high volume. This is how Microsoft is winning the war. High volume low cost! Ian, the sub $1,000 market will ultimately be larger than the current market you and I are familiar with.

Also, my recent article supported new users entering the market. My point is that the market is rapidly being segmented. This is obvious from the channel assembly program at Compaq (to attack the low end) and Intel's recent PII announcement for micros without cache memory for $300.

Finally, while it is true prices for PCs always decline, prices for PCs are declining faster than normal, because this is the first time that processor performance has outpaced functional application developement. The fact of the matter is, that the utility of the low end PC is satisfying an ever increasing social segment that here to fore never could afford to enter the PC market. Again, this is not necessarily a bad thing for the semi's. However, it does represent rapid change the likes of which we have never witnessed over the last 10 years that I've been dabbling in this group.

Jay
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