There are other forces causing ASPs to fall. Perhaps a little ol' thing called demand. You remember, from Econ 101...
Well, you're kind of right.
It's not a fall off in demand, as you suggest, but the creation of a new niche in the market. And the resulting competition in that niche.
Cyrix and Compaq created the first credible PC designed for the under $1,000 market. While many of us wouldn't want to purchase such a machine because of our expectations of early obsolescence (an expectation that was apparently originally shared by Intel), consumers found that price range to be compelling.
There has been a lot of debate as to the degree that this segment has cannibalized sales of higher priced PCs (versus expanding the overall market). But there is now little doubt that there is demand for product in this market segment.
This consumer demand led the other leading PC manufacturers (except Dell) to pursue the lower priced market. These manufacturers have pressured Intel, by using threats of purchasing AMD and Cyrix chips, to offer a product designed for the low priced market. This pressure led to Celeron (and soon to Mendocino).
Celeron, as Intel noted in their analyst conference on Tuesday, is designed for the home PC market. It executes general purpose software (spreadsheets, word processors, etc.) with adequate speeds, while offering superior game and graphics capability.
Anyway, the decline in ASPs is due to Intel's customers pressuring Intel to compete with products of AMD and Cyrix which apparently, due to their lack of financial performance, are priced below cost.
Larry |
