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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (147990)	7/8/2002 3:34:33 AM
From: AK2004	Respond to of 1576658

Ten judging by current amd athlon clusters it comes very little per cpu, I see no particular reason why hammers would be much more expensive. -Albert ps when I said cpu I did not mean a chip but rather a processing unit. From your article it looked like the cost per processing unit was 20K.

To: Tenchusatsu who wrote (147990)	7/8/2002 1:41:03 PM
From: tejek	Read Replies (2) \| Respond to of 1576658

Wicked Games for the PC Industry By Tero Kuittinen Special to TheStreet.com 07/08/2002 12:55 PM EDT Advanced Micro Devices' (AMD:NYSE - news - commentary - research - analysis) second revenue warning in two weeks poses a question: What happened to PC sales in the late spring? The AMD warnings followed harsh comments from Apple (AAPL:Nasdaq - news - commentary - research - analysis) and Intel (INTC:Nasdaq - news - commentary - research - analysis), too. Possibly, something unexpected started happening to PC sales this spring. Of course, May was when the video-game console price war escalated to a new level: All major consoles are now retailing below $200. AMD and Apple are the computer companies with the most exposure to the consumer PC market. They're the early-warning system indicating that some profound changes may be under way. Making a Connection The May video console price cuts probably had their biggest impact in Europe and Japan, where PC demand never took off like it did in the U.S. Sure enough, most PC sector warnings are highlighting softness in these markets. What makes the PC outlook grim indeed is that the game industry was actually in a slump during June; the World Cup depressed console sales and caused the hottest software titles to be postponed until late summer. But the game industry is now switching into high gear. The hottest handheld title of the year, Golden Sun 2, made its June 28 debut in Japan. Eternal Darkness is the July breakout "mature" title for GameCube in the U.S. One of the most anticipated titles, Mario Sunshine, is launching in Japan later this month. This autumn will see a steady stream of other well-known software launches -- the true battle for the console market is breaking out. Last winter's launches of GameCube and Xbox were just a warmup. This winter, all three consoles, as well as the handheld GameBoy Advance, will have a new generation of games in the shops, guaranteeing a higher level of graphical sophistication for a hardware investment of less than $200. And that may be the crux of the matter. Many households will face a simple choice this fall and winter: Either buy a $150 to $200 game console or upgrade the home PC to a $1,000 version. The sizzling new PC title of next winter, Doom III, will demand a top-of-the-line PC to run properly. The graphics-development frenzy has created a situation where PC gaming now demands a commitment for a literally five to six times costlier box than console gaming does. The big irony here is that Microsoft (MSFT:Nasdaq - news - commentary - research - analysis) triggered the video console price collapse with its aggressive Xbox price cuts. The console game price war has been largely discussed as an esoteric topic unrelated to PC sales. But there's a strong possibility that the consoles may be devouring the PC market -- especially as corporate IT spending now seems fated to remain muted for the rest of the year. Sweet Oblivion In a way, Hollywood has been subtly signaling a coming recession this summer. One of the biggest consumer trends of the moment is the amazing movie box office performance -- running 20% above last year's levels in the U.S. Audiences are flocking to escapist marshmallow mush like Spider-Man and Scooby-Doo, which are performing ahead of industry expectations and reflect a withdrawal to comforting cartoon worlds. Darker fare dealing with professional disillusionment (Insomnia) or adultery (Unfaithful) has performed below expectations. It's a pattern of consumer behavior often seen on the cusp of protracted recessions. Shirley Temple and Tatum O'Neal have merely been replaced by Sarah Michelle Gellar (indicating that humanity may have made some progress over the past century). In Japan it took three years of stock market mayhem before consumers began regressing mentally. It was after the early '90s when infantile franchises like Pokemon, Sailor Moon and Hello Kitty started crossing over from a preteen audience to adult consumers. This same stress-induced regression may now be happening globally: Consumers seek refuge in fantasy as their financial aspirations crumble. The PC gaming world is still largely offering scenes of pain, mutilation and horror typified by Doom III. I don't think the consumer appetite for satanic evil is what it used to be; the most recent financial headlines probably saturate that craving. In sharp contrast, Nintendo's new lineup is defined by zany monkeys in plastic balls (Super Monkey Ball 2) and pointy-eared elves prancing around in a cell-shaded paradise (The Legend of Zelda). I think that by next Christmas, the Harry Potter and Lord of the Rings franchises will be breaking box-office records globally. By then, the $150 to $200 video game consoles will be eating seriously into consumer sales of $1,000 computers. Consumers will be moving downmarket as they retreat to preadolescent dream worlds. We're all turning Japanese. -------------------------------------------------------------------------------- Tero Kuittinen wears several hats. He is vice president of wireless communications at investment firm Halsey Advisory & Management of New York; tech adviser to Opstock Investment Banking of Helsinki; and senior strategist to Small Planet. At time of publication, Halsey had no positions in any of the stocks mentioned in this column, although holdings can change at any time.