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To: jbn3 who wrote (46609)	6/7/1998 9:16:00 PM
From: Chuzzlewit	Read Replies (1) \| Respond to of 176387

Bachman, you asked where is the error? Answer: there is no error in your thinking. The problem with the declining ASP argument is that it is presented in a vacuum. It is always presented with two hidden assumptions: Hidden assumption #1: Demand is inelastic. Therefore, decreasing pricing to the consumer doesn't result in increased demand for the product. Hidden assumption #2: Gross margins are fixed. Therefore, decreased ASPs translate to decreased gross profits. Corrollary to hidden assumption #2. Prices are determined solely as a function of cost. Both of these assumptions are patently false. If we were dealing with a product like insulin it would be fair to point to assumption #1 as reasonable, and if we were dealing with a regulated commodity like utility rates assumption #2 would be reasonable. In the case of computers neither of these cases holds. Economics 101 teaches that optimal pricing is the result of the profit maximizing analysis. Dropping component costs increases the opportunity for profits. TTFN, CTC

To: jbn3 who wrote (46609)	6/7/1998 11:26:00 PM
From: Techie	Respond to of 176387

3 why don't you read this post again: exchange2000.com Pay special attention to the following 2 paragraphs: " Intel, for example, underestimated the power of its own microprocessors. Even its low-end chips, which appear in PCs that cost $1,000 or less, are powerful enough to run all but the most sophisticated software. It cannot sell enough of its high-end chips to keep its profit margins fat. .... Ironically, the lawsuit comes at a time when Intel is going through one of its toughest times in over a decade. The company's profit margins are under pressure from tumbling PC prices and it has been forced to cut prices more often in a cutthroat PC market. It has announced plans to cut 3,000 jobs through attrition and layoffs, its biggest job cuts in over a decade." I hope these make the points better than I.

To: jbn3 who wrote (46609)	6/8/1998 9:53:00 AM
From: Techie	Read Replies (1) \| Respond to of 176387

Notice $1200 & Dell. -- Intel<INTC.O> unveils 300 MHz Celeron chip -- SANTA CLARA, Calif., June 8 (Reuters) - Intel Corp. on Monday said it unveiled the second member of its Celeron family of computer chips, which are designed to meet the needs of the market segment for PC's priced below $1,200. Intel's Celeron processor 300 MHz (megahertz), follows the company's introduction in April of its first Celeron chip, running at 266 megahertz. The Celeron family will replace Intel's Pentiums with multimedia technology called MMX. Intel said that many PC makers are announcing systems based on this new processor inlcuding Acer Inc. <2306.TW>, Compaq Computer Corp. <CPQ.N>, Dell Computer Corp. <DELL.O>, Hewlett-Packard Co. <HWP.N>, IBM Corp. <IBM.N>, Packard Bell NEC and Sony Corp. <6758.T>,. ((-- New York Newsdesk, 212-859-1610)) REUTERS