Re: INTC, the PC market
I'd like to share some thoughts with you all and get your feedback. This material will go into a forthcoming article that I'm working on.
This News.com article provides a Socratic backboard:
"No quick fixes for chipmakers" By Michael Kanellos
news.com
Here are excerpts from it, and my comments:
Overall, the main culprit appears to be the sub-$1,000 computer.
Nod, I agree with that. Falling PC ASPs resulting from increasing demand elasticities are obviously squeezing margins in every component. However it is not a culprit; it is a symptom.
Market saturation, a worldwide economic slowdown, and the failure of computer vendors to innovate ...
Whoa, whoa, whoa! That's a fine piece of journalism there, slinging (wrong) theories as if they were undisputed fact. I think I'll dispute them now.
1. The market is NOT saturated. How the hell can you say the market is saturated when there is less than one computer per capita in the richest nation in the world? Compare to over 2 automobiles per capita, and that's an item with an ASP ten times greater.
2. Worldwide economic slowdown? Excuse me, are we talking about the planet Earth? Terra Firma? Last time I looked, many developing nations were struggling to deal with double digit growth rates, and the good old US of A enjoying an extended era of prosperity. To say nothing of Europe.
3. Failure of computer vendors to innovate? There is beautiful for this merde-de-poulet C|Net writer to casually dismiss the legions of high-intensity brains in research labs all over the world continuously pushing ahead computing technologies at a rate never before seen in the history of mankind. This reminds me of one of my favorite sayings: "Do someone a favor and it becomes your job." I think this thankless attitude is the result of taking the incredible pace of advance for granted, so that whenever there is a stumble yam-brains like Kanellos jump up and whine about the "damn computer vendors aren't innovating!" Nauseating.
"The PC market has run into a fundamental problem in that these systems are not as easy to use as consumers expect them to be. All of the low-hanging fruit has been picked," said Michael Slater, founder of MicroDesign Resources.
Here's an interesting statement. The situation Slater describes is half of what I believe to be the current quagmire that the PC biz is wading through. Yes, PCs are not easy to use. In fact, in certain ways they are ridiculously counterintuitive and frustrating. But in my recent research into the history of the automobile I have learned that, among many striking parallels, this is one--early automobiles were also tremendously user-unfriendly. Back then, one had to possess something of an enthusiast bent to appreciate the technology ... hmm, rather like computing enthusiasts today. But, if you take a look around, you might notice something--every household now has two (or more) cars--and *everybody* knows how to drive.
"Getting into that other 60 percent of the households is going to be tough,"...
Indeed. I agree. Not because the process of making a PC easy to use is an intrinsically daunting proposition -- it's only daunting for the engineers and designers who are today in charge of PC development. Most of these guys, unfortunately, live in a different world, and they call the shots. Some of these guys still think command lines are cool. These guys, coming from their 20-year engineering and PC backgrounds, are the guys that think adding a disk to a system is trivial (like I discussed in post 2676.)
Well I have news for them. For the typical user, it's Mission Impossible. I suspect the PC industry as a whole may need to undergo a significant paradigm shift similar to the one the automobile industry went through during Alfred Sloan's later years at the helm of GM. And I don't think it's going to happen soon, although Device Bay, USB, and PC98 are steps in the right direction.
...Intel will likely ship 21 million processors for the quarter, roughly 2 to 2.5 million less than earlier projections, said Wall Street analysts.
Don't you love that? <g> "Said Wall Street analysts." Um, WHO? Either (a) Kanellos was just lazy and didn't bother to look up the references, (b) he pulled the numbers out of his ass, or (c) the sources requested anonymity. Well, if I was going around shooting off numbers like that I would sure request anonymity too. <g> Bottom line: that information is worthless.
Customers have changed how they approach computer buying and what they expect from computers, most said, and the industry has not kept up.
I believe this is only partly right, and that only by accident. Customers didn't suddenly wake up one day and say "Hey, today I am going to start buying computers differently! From now on, I'll only buy cheap machines!" What has happened is that there is no compelling killer app driving sales of high end machines. If somebody is going to go out and spend $3000 on a new computer, they damn well have a good REASON for it. For the past 15 years, they had good reasons. Today, now, early 1998, there's NO GOOD REASON to go out and spend $3000 on a new computer. Particularly one that's as recalcitrant and frustrating to work with as a typical Windows Po'S.
To recover, the industry will have to develop a hardware-intensive application that will excite users.
Aha! Replace "hardware-intensive application" with "killer application" and you'll have what I've been saying for a while now. Better yet, I have a good candidate for that killer-app: the AUI.
I need your critical hats on, my friends. Please be so kind as to tell me where you disagree, and why.
God bless,
PX |
