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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Mason Barge who wrote (4490)	10/29/1997 6:41:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 11555

The Cyrix 686MX parts are fast but you have to keep in mind that the performance deiiferences between various vendors and between generations of parts has grown to be "truncated" just like the comparison graphs that are used. The difference between say a 44 rating and a 39 rating may be made to look like a lot graphically, but it is only a 12% perfromance advantage. The PC industry has grown up by being able to sucessfully promote succeeding generations of product based on new generations of software programs and the MPUs, memory, etc. needed to run them. The newer generation of systems was required to run the newest generation of software adequately. There is nothing at all enabling about the latest generation of processors accept for the promise of being able to run MMX programs. Unless you are running a server or workstation application, there is very little to gain by a 15% perfromance improvement. This is one of the big reasons that the sub $1,000 categaory is growing rapidly. If the typical business user or personal user asks a salesman "what can I run on this (<$1,000 machine)", the answer should be, "anything you want. Here, let me load you up with the software you will need." I listened today to a quarterly conference call for CompUSA. Their sub $1,000 business and build-to-order private label business is booming. They also reported slightly improving margins. Margins errosion has been a big concern of analysts as the volume of sub $1,000 sales has picked up. CompUSA responded that they are making helathy margins on the category because the typical customer walks out with over $1,500 in equipment and software. Their fatest margins on on the service contracts and value added business, such as adding peripherals and upgrades. Their studies show that the sub $1,000 category is not taking much business away from higher priced systems sales. Instead, it is expanding sales to lower income demographic and new users. The point being that what is construed to be "killer performance" is much more important to people in the business than to the "average joe" who buys the majority of systems. It was also interesting that they reported the upgrade business was booming as well. This is a perfect account to sell the IDT C6 directly or Evergreen upgrade kit. There will be those buyers who will only settle for the best performance available (I myself want the best 6 month old technology available - when the price is down 50% and on the second or third refinement). Then there are millions of buyers who want a reasonable cost, reliable PC or laptop that runs the software they want it to, even if it does take 9 seconds instead of 7.