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

To: Ian Davidson who wrote (42036)	12/12/1997 12:27:00 AM
From: Paul Engel	Respond to of 186894

Ian - Re: "Intel/Business Week Articles" Great reference! Thanks. This seemed to be a pretty thorough and even handed reporting job (for a change!). Paul

To: Ian Davidson who wrote (42036)	12/12/1997 8:28:00 AM
From: Charles Skeen	Read Replies (2) \| Respond to of 186894

Ian, an excellent article. Recommended reading for John Fowler and others on this thread, as it goes into significant detail on the gross margins for Pentium II chips at various performance/price levels. Generally well balanced. Here is an excerpt: <<<Indeed, Intel execs insist that their gross margins will remain above 50%. But, says one Intel insider, ''if the sub-$1,000 category grew to more than 50% of the PC market, we couldn't sustain our gross margins.'' Fear of collapsing computer prices at first drove Intel into denial about the low-cost-PC phenomenon. Until November, the company stuck to its well-honed marketing message, enticing customers to buy Intel's latest chips. That included a $100 million ad campaign this quarter to promote the Pentium II, including TV ads of chip-plant workers in clean room ''bunny suits'' dancing on Broadway. But behind the scenes, Intel's managers were already hashing out a response to a market shift that had clearly caught them by surprise. The PC price collapse had been stunning. In January, 1996, a $1,300 machine from Circuit City Stores Inc. wasn't enough to run Windows 95 well: It bought only a 75-Mhz Pentium PC with 8 megabytes of RAM. A year later, the same money bought a 150-Mhz Pentium with 16 MB of RAM--ample enough to run Windows 95 and cruise the Internet. ''Now, there's real meaty value available for less than $1,000,'' says Greg Gonzales, general manager of AES Technology, a small PC maker in Austin, Tex. ''GENIE IS OUT.'' Intel concedes that a permanent change has occurred in low-end PC pricing--similar, perhaps, to the 40% price drop triggered by Compaq in 1992 that slashed margins for both PC makers and retailers. . . >>> Charlie.