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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (32715)	6/10/2001 3:25:47 PM
From: Johnny Canuck	Read Replies (2) \| Respond to of 68443

PC BUYERS NO LONGER HAVE THE NEED FOR SPEED Recent anecdotal evidence seems to suggest that the heads of most major IT departments don’t plan to upgrade their computers until PC makers start to show a little innovation. The PC industry is in the midst of a price war set off by Dell Computer (DELL, $26, up 1) earlier in the year and rekindled by Gateway Computer (GTW, $17, down 1) last week, and market analysts are now predicting that industry sales could fall into the minus territory for 2001. The reason? Most companies and consumers simply have no need to upgrade. Processor speeds continue to climb, RAM prices continue to drop and hard drives continue to grow, but PC users are now finding that their current systems serve their needs adequately, and they see no reason to upgrade. They complain that PCs have remained largely unchanged over the past several years. Many IT managers don’t see a need to replace the computers they purchased several years ago, and despite PC makers’ hopes, many don’t see the upcoming release of Microsoft’s Windows XP as a reason to upgrade either. Windows 2000 seems to suit many of them just fine. Until something new comes along, analysts are expecting low single-digit growth for the PC industry over the next year or two. TODD’S TAKE: Sure, Moore’s Law -- the prediction by Intel (INTC, $31, up 2) cofounder Gordon Moore that the number of transistors in a computer chip would double every 18 months -- is still valid. The question PC buyers are asking themselves is, “What will I do with all that processing power?” Well, for one thing, consumers will eventually want to run the newest software on the market. Did you know that Microsoft’s new Office XP requires 210MB of disk space? Imagine how well that would run on an old PC… The heart of the matter, however, is that although the PC industry is in a doldrums at the moment, there are several key factors that will eventually change its prospects. First, despite what analysts and IT managers are saying now, the introduction of Windows XP this fall could inspire a moderate increase in PC upgrades. It might not be earth shattering, but it should certainly help. Second, Wireless capabilities in laptops and desktops will bring huge innovations to the PC industry and to PC users. We expect the Wireless office -- focused around a Wireless PC and Wireless peripherals -- to be a major driver of PC sales in the next few years. Third, as broadband use picks up and streaming video and voice over Internet (VOIP) demand grows, we’ll thank PC makers for those incredibly fast processors and massive hard drives. There is simply no way that businesses could employ Internet conferencing or programming with old PCs. At the moment many these developments are radicals -- we’re not sure when or how exactly they will develop. The point is that they will, and that they will eventually bring an upside to PC makers. In the meantime we expect to see some consolidation in the PC industry. We also hope that the brutal price war comes to an end. 2001 is shaping up to be one of the most difficult years ever for the PC industry, but the future still shows some promise.