Jay - thanks for a really interesting and enlightening discussion of the realities of equipment spending projections. I think there is something a lot of people miss about capitalization. Concentrating on the ultimate efficiencies available from any type of capital outlay must always be tempered by the hard fact of business: where's the money coming from? A lot of people still don't seem to realize that the Koreans, and to a lesser degree other Asian semicondutor economies, simply cannot pay for as much new equipment as they could effectively capitalize. Nobody will lend them the money and they are categorically overindebted as it is.
A similar factor applies to the clone-chip PC market, i.e. the "sub-$1000" PC's. There is a market out there that would love to have bitchin' sound, video, and speed but can't afford it. Sure, the middle class suburban kids aren't going to be stuck with their $1200 unit for long when they see how cool GutFest II "Toad Creature from Xenon" plays on the neighbor's $3000 unit. But my mom (just turned 80) wants a unit for her AOL account and the occasional hand of bridge or solitaire or whatever, and a 200mhz clone with 16mb and a decent video card is all she needs. And your blue-collar family may find $799 to be a lot of money, but want a computer.
So it's a separate market in some ways, the lower-end consumer market, and these low-margin commodity CPU outfits are a new industry to a degree. That is, for people who 1) just can't afford more, or 2) don't need the extra power.
I just saw a HP with a 200mz (may have been a 233, I just glanced at it) K6 for $799 -- isn't this a Slot 1 chip? So also, this is going to take some (or IMHO all) business away from the Net Computer peoples' hypothetical market, and maybe some workstation business as well. |
