Dave,
I was tired of this debate until you felt it necessary to state so many opinions which have no basis whatsoever in any public facts. Perhaps you have some ultra secret data source that you may be willing to share with the thread. ;-)
My opinion has been that overall demand weakened concurrently with problems in Asia.
Oops # 1. Demand has skyrocketed, just not quite fast enough from the chipmakers' perspective to make up for plunging chip prices. Unit volumes are up substantially across the board; to the point that total chip sales will decrease slightly even though, for example, DRAM prices are down by more than 75% during the past year (I believe it's close to 90% but didn't check for the exact number).
I don't think the PC companies are happy with this price point. I think they have adopted it in response to slackening demand.
No Brainer! No retailer is happy with lower prices, margins, profits.
Then your non sequitur re demand again. Is this just a theory that came from out of the blue or do you feel that every source of data is just lying for some nefarious purpose? ... maybe even a conspiracy?
Up until then Compaq could sell as many units as they made. All of the sudden demand was slowing and so, just as you were
As we all agree, prices have been falling faster than trend. Dell, which has the most efficient distribution system as evidenced by their inventory turns has been stealing share something fierce from the rest of the PC box builders. IBM has finally recognized that it can't win by charging twice as much as Dell or Compaq for essentially the same system and now seems to be more competitively priced.
Yes, individual manufacturers have not been sufficiently nimble, while others have shown great agility and taken share.
Overall, demand and sales have continued to grow substantially (measured in Units sold rather than $).
However extremely low prices are symptomatic of a transition from a growth phase to a bust phase.
Pardon me? If we stick to the semiconductor universe and the real world situation, then:
Lowering prices are a result of:
a massive glut of capacity caused by and overbuild of fabs;
ever improving productivity at those fabs; improving productivity by the box builders;
a more efficient Sales / Distribution process; growing demand;
rapidly increasing unit sales.
There is absolutely no evidence supporting your hypothesis that the semiconductor industry has switched from "growth to bust"; or that saturation of semiconductor use in any part of the world will reach a saturation point any time soon.
I do agree that practically all chips become subject to commodity like pricing as they approach the end of their lifespan. This is not new. As has been mentioned frequently on this thread, transistors have been in "deflation mode" since the beginning of the semiconductor era.
I think the drastically low prices of DRAMs and PCs indicate that this elasticity isn't there anymore. Throw in recession, where people and businesses have less money, and there is no reason to assume this elasticity will return very soon
Do you really think so? Seems to be a whole lot of assumptions unsupported by any of the facts plus the most pessimistic outlook conceivable. Well, you may be right about the future. However, your track record of gathering evidence concerning the past doesn't motivate me to take your concerns seriously.
i.e. If your concerns were based upon fact, perhaps you might have an argument. Rather your post is rife with unfounded conclusions with which you then attempt to build a bearish argument. Not too credible!
And finally, there is no evidence that the pace of innovation is slowing. Rather, anecdotally from the news I read and see, it appears to me that it's accelerating. That's JMHO.
Have a good Sunday,
Ian. |
