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Technology Stocks : Diamond Multimedia -- Ignore unavailable to you. Want to Upgrade?

To: Jonathan Quick who wrote (3511)	3/26/1998 1:14:00 AM
From: lml	Read Replies (1) \| Respond to of 4679

Jonathan, Thanks for your response. I curious, however, if you have any numbers you can point to as indication of how quickly & extensively these margins will decrease? Not all the "emerging" markets I referred to could be classified as "consumer" systems, namely the high-end. I'd been interested, if you know how much of DIMD's market, historically, has been "non-consumer?" What's happening in the "non-consumer" segment that distinguishes it from the "consumer" segment which you characterize by rapidly falling prices? Wouldn't reduced product life cycles suggest increased, not reduced, demand for upgrades, particularly when prices for these upgrades are dropping? If for example, I lay out $150 for an add-on card today which has an expected life of, let's say, 1-year, which would have cost me $250, let's say, two years ago, but with an expected life of 2 years, wouldn't I be more inclined lay out another, let's say, $75 a year from now, for another upgrade? Its a less significant purchase than it was 2 years ago. It has a shorter life, so I going to be unhappy sooner, after its shorter life cycle has run its course. Why would my demand for this less expensive product decrease? Also entering into the equation of narrowing profit margins, is the existence of less & less competitors & barriers to market entry. I would expect that the accelerating price pressure you envision to flatten out at some point as eventually few competitors will remain with the lion's share of a large market, larger than today. Accordingly, these few market participants will be able to exert greater influence over pricing than what we say today. Granted this model doesn't go on forever. But the computer industry & technology do not stand still. There will continually be innovations in computer technology & the multimedia experience available to the user. Today's purchases will become the dinosaurs of tomorrow, which will likely be as little as a year from now. Technological advances & increased demand placed upon hardware by more complex MSFT operating systems, IMHO, will only serve to increase consumer demand for the latest & the best the market has to offer weighed only against the pressure placed upon the his wallet.