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

To: Tony Viola who wrote (56232)	5/30/1998 12:08:00 AM
From: Doug M.	Read Replies (1) \| Respond to of 186894

Paul and Tony, Paul, thanks for your response to the server issue. You're right no matter what the final figures turn out to be, they should be pretty significant revenue generators. Tony, I read recently that there were roughly 2.3 million servers sold in 1997. The figures that I received at the meeting were as follows. The CAGR of the entire server market is 33%. Intel architecture (IA) based growth is 38% and non IA based growth is 13%, if you take a weighted average you come up with 33%. The source of these figures are in Intel's report handed out to analysts. As you probably know Intel never makes growth forecasts on their own, they always footnote it with a source (in this case it's IDC). I just checked my notes and I realized that the estimate for servers sold in 2001 is 8 million, not 8.6 - I was doing it from memory last night. Anyway, it's close enough. From the data I received at the meeting, Intel intends to dominate everything up to what they consider band 5 on their server scale. There are 6 bands on their server scale, band 5 takes them from systems worth $25,000 to $100,000. Band 6 is above $100,000. Intel fully believes that the Xeon will enable them to dominate everything up to band 5. I guess they'll attack band 6 when Merced comes out, but we have to ask Paul when that will actually happen. The band with the highest unit distribution is band 3. This is roughly 38% of the market. It is composed of servers that are worth $4,000 to $8,000. As of Q4 '97 Intel had over 95% of that market segment. They had about 99% of everything below that, which comprises about 30% of server units sold. Band 4 (systems worth $8k to $25K) makes up 25 % of the market and IA controls about 45% of that segment. By the way bands 2 and 3 are considered web servers. As you can see that at the real high end of the market (above band 4 or $25K)the servers are mostly non IA and it only makes up about 7% of all units sold. The real volume is at the lower end which is mostly IA. Therefore, Xeon will enable Intel to dominate everything up to band 5, which will all be NT based servers. Sun and the other Unix players will just be really high end stuff, where Intel will need the Merced to compete. Unfortunately, we won't see it for a while. But as the figures show, Xeon will take Intel a LONG WAY. I guess the 8 million figure is for all servers, and I interpolated that Intel would have 85 % of that market for simplicity. Therefore, they should sell 7 million or so, with an average of 3 processors (according to Paul). However, I think they may get more than $400 bucks on average per processor. I hope this was helpful and not too confusing, Regards, Doug