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

To: Pigboy who wrote (52774)	4/12/1998 9:50:00 AM
From: gnuman	Read Replies (1) \| Respond to of 186894

Pigboy, re: System upgrades. I don't think I've been saying there isn't a market for upgrades. What I sense is a slowdown in upgrade demand, based on the fact that the majority of users don't see new applications that require an upgrade. I stated in an earlier post that I think the only "killer app" this decade was the web browser, and it works fine on most of the installed base. (Lot of argument about the definition of "killer app"). And those people that are upgrading are getting high performance systems at very low prices. And this has implications on earnings. So what I have been saying is there appears to be a major a shift in market dynamics. The introduction of sub-0's seems to have started this shift. The result appears to be that Intel is bringing the cost of their CPU's more rapidly down the learning curve in response. They also seem to be displacing current technology at an abnormally high rate. Even the entry price of it's new CPU's appears to be well below historical levels. So my question is, what impact will that have on Intel's business plan? Case in point, if the new PII/400 will sell this quarter at the same price as a PII/266 did in Q1, where will the price be in Q3/Q4? I reference the NEC system advertised in the current issue of PC Magazine. This system is fully loaded with 64MB SDRAM, 4MB Graphics card, 56K modem, 17" monitor, 32X CDROM, etc., for $2299! I think that's the lowest entry price for the latest and highest performance CPU I've ever seen. I've also said I think the rapid intro of new CPU's and the steep learning curve was causing confusion in the market. I think I read where the only PII listed in the top ten in January was the HP8260, a PII/266 selling for around $1700 sans monitor. But it looks like you'll be able to get a PII/400 around that price by the end of Q2! So the poor guy that bought the PII/266 is seeing that product displaced by a PII/400 in less than six months. BTW, I'm one of those poor B's ;-). It also looks like PII/333's will be well below $1.5K by the end of this quarter, got to squeeze the PII/350 in there someplace. Anyone planning a purchase may be motivated to keep waiting, especially if his current system is adequate to the task. And if these PII's come down the normal learning curve, where will Mendocino be priced? Celeron may have the shortest life of any product Intel has ever produced. I have to tell you that this new pricing has made me rethink AMD. This must be causing marketing problems at IBM. The PII/350 could find it's way into <$1200 PC's by Q4. (Based on Intel's roadmap which currently shows the PII/350 slotted for $1.2 - $1.5K systems, but the market looks like it's almost 2 qtr's ahead of this roadmap). So maybe Mendocino will have to go into sub-0's? It sure looks to me that Intel has decided to attack socket 7 with PII pricing. And that should go a long ways to maintaining market share. But does anyone have an idea of what this means to earnings? I'll admit I'm confused, but it is kind of exciting. Paul E. Anticipating your post that, "I always knew you were confused" ;-)