Typical market over-reaction -- the earnings
drop 10%, but the stock price dropped 20% of
the last 2 weeks. Every time Intel's price
fell like that, bargain hunters made out like
bandits.
However, the announcement today does indicate
2 things:
1. The robustness of PC sales did not make up
for the lowering of margins for desktop PC's.
2. The appetite for more powerful PCs is
there, but insufficient to propel the growth
engine.
According to IBM VP, John Patrick, IBM's
vision of billions of connected computers is
also not in desktop PCs, but in appliances --
TVs, VCRs, cellphones, ovens, vaccuum
cleaners. IBM strategy: JAVA based software
on every appliance. Microsoft is also serious
about the size of that market. It's strategy:
Windows CE 2.0.
Intel has both the investment $ and the fab
plants to drive and dominate the HARDWARE end
of that market. That market may be small
today, but has much bigger growth potential
than today's desktop market, which has a 40%
penetration already. Merced will make money,
but it is a replacement market, where the
competition for turf will be fierce.
Miniature PCs will be a new market, where
there is no viable competitor on the hardware
side.
I am straining my neck for all news where
Intel makes strategic moves in that direction.
Long Intel. |
