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To: Jonathan Quick who wrote (3568)	5/13/1998 1:16:00 AM
From: Javelyn Bjoli	Read Replies (1) \| Respond to of 4679

I agree with you that the motherboard business is not an enviable one to be in. I do not, however, see any businesses that DIMD is primed to get into that are growth & high margin that are also high volume. Unless they want to be a small niche player for high-end CAD video boards, they need to go where the market is pressuring them to go. They can either make the MM motherboards or be put out of business by somebody else who will. What DIMD does for a living is make boards, of good quality and with good software driver support. I'm interested to hear how you think they could get into markets like displays, scanners, speakers, when it is not really what they do now. Unless you think they are going to start buying up small companies that make such things and become a "PC accessories conglomerate". If they are just going to OEM them from someone else, they are moving up a tier to become a VAR, which puts them more in competition with their present customers who already sell such equipment. I think if they are going to bump a level, maybe they should consider making PC's that are a notch below everybody else in price due to higher integration and a stripped-down feature set. The big PC players are starting to balk at coming down to really low price levels because they don't really want low-margin, high-support customers. It could wind up being a great high-growth niche for somebody used to living on thin margins. The consumer side of the PC business is moving towards total commotidization ($4.99 Walkman anyone?) and only the companies who can profit with a model more like consumer electronics than computers will survive.

To: Jonathan Quick who wrote (3568)	5/13/1998 2:10:00 AM
From: Javelyn Bjoli	Read Replies (1) \| Respond to of 4679

I also have to say, if DIMD was good at sniffing out high-margin opportunities, they would have done a better job of profiting at their current business over the years. It wasn't so long ago these guys "lost", what was it, $30 million in inventory? They have a history of doing a mediocre job for long periods, punctuated by short bursts of high-profit, high-volume products like the old CD upgrade kits & 14.4k modems or the new Voodoo 2 cards. They do at times seem like a "marginal company" but somehow they keep hanging on while many others disappear. I don't see them going out of business anytime soon but neither do I see them striking it rich on some undiscovered high-profit niche of the computer market. Motherboards are far from a goldmine, but maybe they are just good enough to keep the company around while they look for the next good idea. The examples you gave are not good examples of high-margin opportunities for DIMD. CRT's are a mature business. Flat panels are in such oversupply right now that desktop FPD monitors will probably be reasonably priced several years ahead of schedule. Speakers come free with most PC's these days and cost $30 at retail unless you're Bose. In my opinion, the whole consumer PC industry will continue to see margin squeeze until they stabilize on sealed boxes which are revised only every year or two. People are tired of upgrading every year unless the prices are dirt cheap - PC's are "good enough" now that you really don't need the latest & greatest anymore. Once the market is saturated and people only replace the box every few years, the better boxes can command premium again. But we have to get to the new market model first.