This can't be good for Intel:
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Glory Days For PC Vendors Will End In 2000
(10/29/98 7:29 a.m. ET) By Eileen Colkin, InformationWeek
Corporate PC-spending will peak in 1999, then sharply
decline after 2000, according to a report released
Wednesday by Cambridge, Mass.-based Forrester Research.
According to the report, which is based on spending
plans collected from 50 Fortune 1000 companies, corporate spending
on PCs is expected to hit a high of $55.4 billion in 1999, up from 1998's $53.5 billion. The increases come as companies look to replace outdated desktop hardware that may not be year 2000-compliant. Spending is expected to plateau late in 1999, then drop to $47 billion in 2000, once companies have completed the upgrades.
Two-thirds of the companies surveyed indicated they'll
spend money developing applications that support PCs
with browsers, rather than upgrading PCs. Businesses
will increasingly focus on less expensive Internet-based
equipment, such as PalmPilots and "simple screen"
machines that don't have full-fledged functionality, but
are tailored to perform specific tasks.
Carl Howe, Forrester's director of computing strategies services, said he believes the changes in the PC market
will result in increased competition, price slashing, and consolidation.
"Our view is the top five [vendors] will get more share
by taking it away from second- and third-tier vendors,"
Howe said. "But when you're trying to steal market
share, the weapon is price, so even if you're winning,
you're shipping more units, but not gaining revenue."
Howe said he predicts in such a market, services will be
a much stronger selling tool. "That's good news for folks
like Compaq: Their acquisition of Digital will pay back in spades.
But folks like Dell who look outside for services won't fare so well," he said.
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