Z, did you read the Business Week article Gottfried cited?
businessweek.com
>>>>>>>
Despite zippy 23.5% unit volume growth in PCs for the fourth quarter of 1998, revenues in the U.S. home PC market
shrank 10%, says Dataquest Inc. analyst David Stremba. The problem is that PC makers know they won't be able to build new businesses fast enough to meet Wall Street's expectations -- and so they have no choice but to keep the pedal to the metal on PC sales.
<<<<<<
Falling ASP means lower margins, in spite of strong unit growth.
So the future is not bright for box makers, like we've been saying for years.
Plus, instead of the easy money trickling down from the box makers to the parts makers, like we've been hoping, it now looks like everyone might be in for a little pain, box makers as well as parts makers.
All the box makers are seeing weak pricing, as they increase their cheap PC sales. DELL, GTW, CPQ, MUEI, etc are all getting into the cheap PC arena.
And if demand does drop off, due to Y2K or whatever, then most of these companies are going to be in deep doo-doo.
Regards,
Larry |
