Regarding the PC marketplace, and machine prices:
I used to have a job in the mini-supercomputer industry.
(Design Engineer at Scientific Computer Systems (SCS) in San
Diego.) Then one day the engineers began to notice that
the new single chip processors were running mighty fast.
The Fairchild "Clipper" was in the workstation we used to
design boards and chips with. They weren't as fast as the
ECL based supercomputers, but they were a substantial
fraction as fast, and they were an incredible amount cheaper.
So we concluded that we would have to make our machines cheaper
to match. The rest of the guys left it at that, but I saw
a little further and knew that since the market wasn't that
elastic, it was clear that the declining ASP would mean fewer
dollars going into the industry as a whole. That is, normally
having a cheaper product means more units sold. But when the
industry is a mature one, like supercomputers were in '84 and
personal computers are now, a reduction in ASP does not cause
a corresponding rise in the number of units sold. Instead,
the lower prices steal costumers away from the high end units.
And when the number of dollars going into the industry decreases,
so do the jobs (and the profits). So I left the supercomputer
industry and went into designing graphics boards for PCs.
Now the vast majority of the mini-supercomputer makers are
defunct, and the majority of the supercomputer makers as well.
The one thing I know, is that in a commodity market a decrease
in the price of the commodity is a disaster of the greatest
proportions. By decrease in price, I do not refer to the normal
decrease in price of older/obsolete machines, but instead a
decrease in the average sales price.
These companies are history, and most will be out of the
business or barely profitable within a few years, IMHO.
Personal computers are finally going to a real
commodity market. Wheat is dumped on the side of
railroad tracks when the harvest is beyond the capability
of silo storage. The same thing will happen with computers.
Once they get the price of a decent Pentium down to $250 with
the monitor the majority of the companies involved will be
gone. Basically what we're talking about is a television
with a little more complicated drive circuitry, plus some
peripherals. Anybody who has visited Frye's Electronics
knows how cheap all the parts are, except the CPU, and now
that is going to be dirt cheap too. So say bye-bye to an
industry. The buy and hold types are going to get burned
over the next few years.
-- Carl |
