" I agree. When that occurs, I will divest myself of PC stocks.
My opinion however is that we are still a ways off. Two things
will have to happen to raise the exit flag for me: "
Hurray, We finaly agree on something.
Now Lets get agressive,
I also agree that Share domination will occure first, That may not be far away.
Here is where we disagree, You assume that:
If technology continues to advance, (which it probably will for a long time, We agree) Then the Obsolescence cycle will continue as it has. Which you say is key in this industry.
Where we are today is:
The PC industry is deviding into tiers.
tier 1, sub zero computing, Good for all SOHO basic activities + surfing.
Tier 2, call it $1,500 area, Good for all of tier 1 + Heavy lifting, Larger office application, small network hosting, Demanding Gameplaying.
Teir 3, 1,2 + Design work including graphics work and Mid size net hosting.
Tier 4, this would be above $5000, 1,2,3 + Large network hosting Rocket ship design, any PC task.
Tier 5, enterprise systems, something like Running Delta's reservation system. Limited number of customers here.
The greatest number of units are sold into tiers 1,2,3. Problem is that hardware is ahead of software, and at the rate MSFT is going, it is going to stay that way for a while. This is why the price war is taking place now.
Tier 4,5 generates most of the profits of these companies, But I think the war in the lower end will cause #4 to drop to #3. and so on.
DELL's business model is dependent on #'s 3,4,5. But at the rate prices are coming down, in 6 months, (P II < $1500) DELL will not be adressing #3 and close to loosing #4. The HP announcement is what DELL cannot compete with. That is where the Unit growth is.
Decision makers see $ 799 PC's and sooner or later they will want them for their office instead of higher priced higher margin models.
I think this time is now.
Jim |
