Tip, It is seasonal in that the second quarter, and, especially April, are usually the weakest of the year. Unit growth continues to slip, year to year, but dollar growth is slowly turning negative. The problem is, the bulls had already claimed that June was great and that Win 98 had turned the cycle for the boxmakers. The numbers don't support that assertion.
Lower component prices has been the key to remaining profitable in the pc business. However, component prices are only part of the total cost game. The cost of labor is not going down. The cost of commercial real estate is soaring. Delivery costs are moving up. Interest rates, though still low, are not dropping as they have been the past few years. Marketing costs, as the boxmakers try to differentiate their commodity products, are on a rocket ride. And, component prices, while dropping, are no longer in the same freefall they once were in. Besides, the consumer may want 64 MB in his box, but he wants to pay a lower price than he would have paid for 16 MB last year. It is happening, but it cuts into the margin game. A lot.
The key to GTW is when folks will wake up. After Xmas is always good, but you run the risk of missing the slide. And it is already down 15 pct. from the most recent high.
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