I just read the May editorial of the magazine upside written by the editor, Richard Brandt. It's another view of the slowdown in the PC business. A few excerpts are:
"Long term, the digital technology boom and the growth of the Internet, both of which feed the PC business, still make the technology sector the best place to put your money. But right now, you'd better hold onto your wallets. Over the next couple of quarters, we could very well be heading into a very tough cycle.
Despite their problems with the feds, the great thing about the Intel
and Microsoft near monopolies is that you don't have to consolidate a
lot of data from different companies to get a picture of the health of the PC business. Intel provides an advance warning system: When its
orders slow, PC makers will not be building as many systems.
Microsoft follows the curve; PC makers do not pay their Windows licensing fees until they ship computers out the door.
This time, Intel's warning is particularly disturbing. The company says it's not suffering from the Asia crisis because orders there are flat, not declining, and it's not feeling the effect of any inventory buildup among chip distributors. Nor does the problem stem from a shift to sub-$1,000 PCs: Price-leader AMD (which should benefit from the low end) is also suffering, and Dell (which should be hurt from a shift to the low end) is booming. Lastly, Intel insists that its ramp-up of the latest Pentium II generation is going fine.
No, the main culprit seems to be a slowdown in overall PC sales--the
worst possible scenario. The big weak spot is in orders from large
PC makers, primarily in North America, Europe and Japan. Could it
be that the world's biggest PC markets are saturated? People have
been saying that huge PC inventories are gathering mold on shelves.
I wouldn't be surprised if they were right--cramming the channel has
been the industry's shell game for years. And Compaq, which has
nervously watched Dell gain on it, is a primary channel-stuffing
suspect.
If that's the case, watch for sour results from all but direct-seller Dell in the coming quarters. And while I hate to underestimate Microsoft, which displays an uncanny ability to move to wherever the market is hot (including server software and low-cost database programs), I'd be wary of slowing Windows 95 (or 98) sales in future quarters.
Finally, keep in mind that this is not a one-quarter phenomenon. It
really hit Intel in the last quarter of 1997, when that company's
revenues rose only 1 percent. The crisis is only deepening. The sun
should shine again, but don't be surprised if it takes a year for the
muddy ground to dry."
The entire article can be seen at:
upside.com
When I read articles like that it makes me think the rise of approximately 30 percent in the semi-equips since December will be hard to sustain over the next three months. It could be a choppy market in 1998, something like 1996 where not too much happened.
Then 1999 might be like 1997. |
