Francis, some IMHO's to your questions about why should 2H98 see things turning around to the upside for Intel.
Re: "will the
demand for high end machines increase, stay flat, or decrease?"
High end machines are on a major increase trend. 2 million NT servers sold in 1997, 8 million projected for 2001. This market is just getting off the ground, and the sales trend up will continue, or accelerate in 2H98 with Xeon being the catalyst. Pentium Pro sold very well, as exemplified by Dell's server business being up 190% 1Q98 vs. 1Q97. I'm not sure how all the other server folks did, but I don't think Dell is alone here. Now, if the Pentium Pro did very well, how do you think a 2X speed Xeon server CPU chip is going to do? In this market, unlike the desktop, every last bit of CPU crunching power is highly sought after. Someone said that one Xeon needs to be sold (I don't know, maybe in the average size and cost) per 20 desktop or notebook CPU chips for Intel to get ASP's they need. We'll see.
Re: "Will the price war continue and spread to the business and high end markets, or will is stay in the retail sector?"
You haven't been paying attention. Intel has NO competition for high end (server) CPU chips (I don't consider Alpha as competition). No competition, no price war, in the high end markets.
Re: "Will the economies in Asia, Europe and North America
get better, stay about the same, or get worse?"
Probably doesn't matter re the high end (server) CPU chips. I suspect Intel will sell all they can build to US and Japanese companies (article yesterday about excellent growth in Japan for servers). OTOH, Europe has come back. Siemens, Bull and ICL come to mind as three potentially good European customers for Intel for this product.
Tell you what. I'll keep an eye on this market, as best as I can get data, in terms of volume of chips sold by Intel (?), number of servers shipped by the Dells and Compaq's of the world (these are published in quarterly and annual reports), ASP's (?), etc. Let's see how important the high end is to the bottom line for Intel. Must be important, else why all the fuss over the Merced slip. Two more reasons why NT servers are and will continue to be an explosive growth market:
1. The main application is probably as Internet server, I've heard that the Internet is growing some.
2. Users are falling all over themselves swapping out UNIX servers in favor of NT servers.
Tony
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