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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: maui_dude who wrote (138279)	6/27/2001 5:28:58 PM
From: Saturn V	Read Replies (2) \| Respond to of 186894

<Does anyone have any idea of the current annual unit processor shipment of non-intel high-end servers ? > I dont remember the exact numbers, but I do remember seeing the numbers within the last year. My recollection is that the total number is less than 100,000. However you cannot model the new Itanium servers as one for one replacement for existing high end servers. The lower cost of Itanium based servers will increase the unit demand, due to the well known elasticity of demand. I am reminded of the microprocessor situation in the early seventies. The microprocessor was viewed as a replacement for minicomputers. At that time the highest volume minicomputer was the DEC PDP-8, and that only sold 20,000 units annually. If the price of the microprocessor was only $100, and an annual volume of 20,000 ,the margins would not cover the development cost. As we all know the lower price of the microprocessor eventually stimulated a huge increase in volume which made it worth while. Similarly when the first ENIAC was built in the early 50's, the worldwide demand for computers was estimated as only ten units, because the ENIAC was viewed as only a machine for automating ballistic calculations for field artillery. Hopefully if the server is cheap, almost every web site could use an Itanium and supply new video streaming content. Then the Itanium could become a cash cow.

To: maui_dude who wrote (138279)	6/27/2001 5:55:02 PM
From: Mary Cluney	Read Replies (1) \| Respond to of 186894

Maui,<<<I read in one of the gazillion articles about Q-INTC deal that 1 million Alphas ship (I doubt if this is annual shipment by compaq). If 50% of these are replaced by Itanium (Avg ASP $3000), this would give about $1.5B to Intel (most of which adds to the bottom line, since margins would be very high on these).>>> The problem with most of these reports (either from news reports or analyst reports) is that the writers have very little knowledge concerning this market. They probably know even less than most of us on this thread. They frequently confuse server systems that include storage and network hardware with the server (processor) itself which contain the Alpha chip. In this case, I believe it is quite simply 1M servers that CPQ sells each year containing the alpha chip whose ASP is a lot less than $3000. Sometime ago, you posted an article: <<<Here are the revenue projections for server-processors (hope the projections are not revised with the market downturn): The market is big and is certainly up for grabs. According to a server-processor revenue forecast from JS Bancorp Piper Jaffray, revenues from IA64 processors are expected to reach $25 billion in 2003. Revenues from RISC processors are expected to remain flat for the next two years and actually decrease to $35 billion in 2003. The total server processor market is expected to reach $89 billion in 2003. >>> Most here (on this thread) questioned the ramp. But, I don't. This forecast comes from Ashok kumar who I believe is quite knowledgeable from a technical perspective. He is probably more techie than financial analyst and I don't think he throws out these numbers casually. In the high end server market, CIO's generally can predict their spending (budgets) two or three years out - so that the size of the server market is very predictable. Ashok Kumar, I'm guessing, made some assumptions and then made his forecast. I don't think he went too far out on the limb on this one. Without even having knowledge of the CPQ-Intel deal, Kumar could have made the assumption that there was no future for CPQ to continue investments in R&D and manufacturing and where they could see better results in concentrating on services. It was a no brainer. Like in old time western movies, the slick new CEO at CPQ saw the hand writing on the wall. He was being run out of town in the the server chip market. So, instead, he went out and ran in front of the mob pretending he was leading the charge. Mary