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To: Pierre-X who wrote (5133)	6/19/1998 10:21:00 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 7841

Pierre, You asked. However each time there has been an identifiable factor that has led the PC supply chain out of the doldrums. Do you have any hypotheses for where such a boost may come from this time around? I was kind of counting on you telling me! I certainly hope this is not one of those situations where we are all overconfident because the person next to us is isn't panicking. It's kind of the opposite of mass hysteria, maybe we should call it mass inaction. As a self proclaimed contrarian, I try and avoid those situations. I really don't believe that this is such a case however, and while I wish I could tell you some specifics on what creature will start devouring PCs at the top of the food chain, I can't. What I will offer is a few possibilities on what will begin the next wave of PC buying. I am sure after the fact, the factor will be easy to identify as well. 1. The next killer app. What will it be? My guess would be something from the broad area typically given the label communications. Specifically my bets would be on voice. 2. The growth of the world. Even though it is now fashionable to heap derision on the new emerging countries, I firmly believe that the world is on an irreversible course toward prosperity. All the "Asia Crisis" will boil down to is a confidence builder that these countries can make mistakes, learn from them and continue to grow. Much the same way the United States has done over their history. The fact remains that fewer than 5% of the world owns a PC, which I believe is a product that will be bought earlier in the development cycle than most people think, probably right after transportation. 3. Inventory cycle. We have unquestionably been going through an inventory cycle in PCs. Was the main culprit the JIT manufacturing introduced by Dell? Was it a slackening of end demand? Whatever the reason inventory cycles are extremely important to the health of any industry, and even entire economies. I don't think that many non-economists realize that it is the inventory cycle that has been the main cause of most of the recessions that the U.S. has seen this century. My point is that inventory cycles have good times and bad. We have been living through the bad, maybe the good is about to arrive. 4. Obsolescence and incompatibility. The consensus thinking on PCs seems to be that since the Internet does not require a massive amount of computing ability that the replacement cycle has been extended. I say wait and see. Many of those who bought a PC to fool around on the net are finding themselves wanting more and gaining confidence and familiarity with computers. These people will not be satisfied with a bare bones model forever. Additionally many buyers reach the stage where they want to add so many features to their existing PC, but fearing that the system will not work, they just buy a new PC that includes everything they want already installed and working. I myself have done this, justifying it by saying that 10 or 20 hours of my time is more valuable to me than the expense of a new computer. I don't think I am that unusual. Sorry if this is too long. Your question cuts to the heart of the matter of investment in PC related companies. I wish I could formulate an easy answer that cuts to the heart as well. If I had to give one I think I would just say that the PC is still like my 8 month old daughter. She hasn't grown the last month of her life but I am pretty sure she hasn't stopped growing permanently.