Nadine:
Good comments.
IDC and the other market research organizations are known for always putting out optimistic reports,....understandable, given who pays their rent.
I have a small file of laughable IDC and other PC related market research company "reports", which I keep just to remind myself of their bias. Here's just one example from mid 1996
DRAM chip prices are expected to stabilize this year, after having slid sharply at the beginning of the year, a top analyst at market research company Dataquest said Tuesday.
Speaking at a seminar, principal DRAM market analyst Jim Handy said continued strong growth in PC sales should support DRAM prices throughout the year and lead to a normal DRAM market in 1997. "We think it's very unlikely that DRAM prices will collapse", he said.....etc, etc,....
I wouldn't quibble over the difference between 2-3% and 5% in added N. American penetration due to the cheap boxes, except to note the positive bias one should expect from the market researchers, and to note that most reports last summer spoke of a 40% N. American PC penetration. My figures are from the field. I do know that retailers, resellers and producers were looking for much greater added penetration through the Christmas period, and things have declined since. It's also worth noting again that the box builders were all counting on big sales into Asia this year, which is simply impossible now.
With respect to placing bets now on who will win the price wars, I'd argue that :
- the publicly traded box builders are currently priced for a rosy future rather than a price war environment. Their stock prices will crater as their earnings come off, based on BOTH declining earnings and reduced growth multiples. Why not wait and buy them at much lower prices 6 months from now. An added advantage, ...the survivors will be evident.
- The difference from previous price wars include a much larger supply base, a smashed Asia, and no new sales drivers.
With respect to business buying, aside from saturation, there will be cutbacks in capital budgets this year, as a result of Asian pricing pressures, which are already starting to show up. 1998 is not going to be a banner year in the majority of businesses.
Best, Earlie |
