Paul:
You have been around long enough to know that Dataquest has a lengthy history of putting out forecasts that never come close to the follow-on reality,....which makes sense when one takes note of who pays the bills. I've a file of Data quest quotes from the past that would embarrass both you and the company. But the fact of this situation is that your referenced clipping has nothing to say about the future, so we can leave Dataquest without commenting on their past missed forecasts.
That aside, let's take a closer look at the content of the news clipping that you quoted in suggesting that I'm not accurate in my "approaching saturation" comment. I note that:
- the quote refers only to Q3 (not the year) and only to the growth of Windows NT workstation shipments (NOT sell through, NOT revenue, and certainly NOT the overall industry situation).
- It also mentions that the Windows NT shipments grew 140% over Q3 1997, even as Unix shipments grew at one tenth that rate. Obviously the Unix systems, which until recently dominated this market sector, has not experienced significant growth. Windows is taking market share, but is as yet a fraction of the whole sector. Yes it is the growing system, but this does not speak at all to the overall sector's current state.
- The article notes the problems experienced by CPQ, Sun and SGI with respect to lost marketshare while HWP gained market share,....this is exactly the set of conditions one finds in a saturated market,....marketshare battles among too many players (and the article didn't mention them all), fighting over a small market sector. Your article appears to lend support to my observation.
If you genuinely think the workstation sales that will ensue from this contract will make a big difference to INTC's numbers, I think that you are inaccurate. Look at the number of micros sold by INTC in the last quarter then estimate the tiny fraction that the whole workstation market is of this, never mind the subset that is represented by this particular situation. Incidentally quoting "expected margins" is a joke, given the pressures exerted on semi producers in tight markets. Also I'd be surprised if there were not rather substantial "performance" or "volume" price concessions in the contract, given the new relationship it created and the competitive environment that I alluded to.
The gist of the clipping is that unit shipments are up, but that profits are down. This is precisely what one finds in a price war environment (which is exactly what is taking place in the workstation market), and is also the hallmark of a saturated market.
Best, Earlie |
